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					</table>The Indian rupee&#8217;s recent fall against the U.S. dollar has added to the domestic renewable industry&#8217;s woes which is already struggling with rising prices, duties, and supply chain issues.
The rupee has been trading above ₹79 to the dollar, thanks to the surging dollar, rising imports, and foreign portfolio investors withdrawing money from emerging markets, including India.
Renewable energy project developers say the rupee depreciation will translate into a sharp jump in EPC (engineering, procurement, and construction) costs, leading to delays in project execution. Even a slight increase in the rupee-dollar exchange rate leads to a consequent increase in project costs.
Industry insiders told Mercom that the impact on EPC costs would be much more because of the significant exchange rate variation between the time of bidding and the finalization of the solar module supply agreement.
Goutam Samanta, Head, PV technology, Juniper Green Energy, said solar power developers would suffer an overall reduction in already modest margins. &#8220;Moreover, a major part of the project cost is incurred in dollars, whereas the revenue is derived in rupees. This exposes the bidder to the risk of inflation in project cost due to the fluctuating currency rates.&#8221;
Avinash Hiranandani, CEO &amp; MD, Renewsys, concurs. &#8220;The depreciation will impact the entire solar value chain.&#8221;
The rupee value has depreciated around 13% in a staggered manner in the last four years. Indian solar manufacturers are trying to cope with the consequent impact on working capital. As Harsh Jain, Director, Citizen Solar, put it, &#8220;Along with the Indian rupee, the Chinese RMB has also depreciated. So, for a net import country like ours, along with the rupee, there is added price pressure from China. It is tough with BCD (basic customs duty) added to the mix.&#8221;
Industry bodies have in the past voiced concerns over the rupee&#8217;s volatility. In 2021, the National Solar Federation of India <a href="https://mercomindia.com/usd-inr-exchange-rate-rtc-renewable-bid-nsefi/" target="_blank" rel="noopener">wrote</a> to the Ministry of Power to consider the U.S. dollar rate escalation and its impact on bids to procure power round-the-clock from renewable energy sources. It had requested the ministry to amend the guidelines to allow escalation indices used for calculating levelized tariffs to be converted to rupees based on the exchange rate for that year.
It is not that the rupee depreciation alone is to blame. According to Jain, polysilicon prices have increased by 3-4%, leading to wafer/cell price hikes in the last three months. On the other hand, prices of aluminum and copper (copper ribbon used in solar panels) have crashed in the last few weeks.
&#8220;Recession has been looming in the background. The private sector demand has come down. The sentiment is changing, and customers prefer to wait since solar is a luxury at this point,&#8221; Jain said.
Waiting for the international market to ease is one way to cope with the contingency. Otherwise, given the short timeframe between negotiations and delivery, any cost impact will be passed on to the consumer. &#8220;Since the operating margins are very low, hedging is not possible,&#8221; Hiranandani said.
However, contingencies are not new to solar. Though the industry suffers from such blows, it has recovered with sudden positive changes.
Samanta feels that along with an allowance for hedging, suitable clauses must be incorporated in contracts to account for unpredictable changes in imported items, specifically modules or module balance of systems. &#8220;Higher power rated modules with latest technologies will play an important role in maximizing plant performance (enhancement of power output) and reducing costs.&#8221;
Though there is admittedly a deep worry building, developers and manufacturers are in a wait-and-watch mode for the time being.
The industry experienced a similar <a href="https://mercomindia.com/rupee-depreciation-affects-solar-supply-chain-india/" target="_blank" rel="noopener">situation</a> in 2018, but that phase did not last very long.

Rupee Depreciation Adds to Renewable Energy Sector’s Woes

Imports of solar cells and modules surged by a staggering 1,000% in the second quarter (Q2) of the calendar year (CY) 2021, totaling $762 million (~₹56.6 billion) as <a href="https://mercomindia.com/india-solar-imports-plunged-q2-2020/">compared</a> to $69 million (~₹5.25 billion) during the same period last year which was severely affected by COVID-19.
Quarter-over-quarter (QoQ), Indian solar imports rose by 194% in Q2 2021 <a href="https://mercomindia.com/solar-imports-up-q1-2021-exports-show-drop-of-19/">compared</a> to $259.5 million (~₹18.9 billion) in Q1 2021.
Similarly, solar exports also rose by 151% to $61 million (~₹4.4 billion)  year-over-year (YoY) in Q2 2021, compared to $24 million (~₹1.8 billion) during the same period last year. Exports surged 113% compared to $29 million (~₹2.08 billion) in Q1 2021.
<a href="https://mercomindia.com/wp-content/uploads/2021/08/India-Solar-Cell-and-Module-Quarterly-Import-Export-Activity-M-1.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-28278" src="https://mercomindia.com/wp-content/uploads/2021/08/India-Solar-Cell-and-Module-Quarterly-Import-Export-Activity-M-1.png" alt="India Solar Cell and Module Quarterly Import-Export Activity ($M)" width="548" height="354" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/India-Solar-Cell-and-Module-Quarterly-Import-Export-Activity-M-1.png 548w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/India-Solar-Cell-and-Module-Quarterly-Import-Export-Activity-M-1-300x194.png 300w" sizes="(max-width: 548px) 100vw, 548px" /></a>
This is the first big sign of market recovery and demand bounce back since COVID-19 shut down the markets at the end of March 2020. After the lockdown was announced on March 25th last year, solar construction activity was muted, and solar installations were down to just 3.2 GW in the calendar year 2020.
Activity has picked up this year, and the lockdowns were more targeted and managed by states resulting in a lot less disruption in construction and development activity.
Despite higher component costs and shortages, Imports soared 346% in the first half (1H) of 2021 compared to the 1H 2020, while exports rose by 50% compared to the same period last year. However, compared to pre-pandemic activity in 2019, imports were slightly lower. Exports, on the other hand, were up by 30%.
The effect of ALMM on imports is expected to show up in the second half of the year.
<a href="https://mercomindia.com/wp-content/uploads/2021/08/India-Solar-Cell-and-Module-Import-Export-Activity-M-1H-2018-1H-2021.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-28273" src="https://mercomindia.com/wp-content/uploads/2021/08/India-Solar-Cell-and-Module-Import-Export-Activity-M-1H-2018-1H-2021.png" alt="India Solar Cell and Module Import-Export Activity ($M) 1H 2018 - 1H 2021" width="549" height="377" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/India-Solar-Cell-and-Module-Import-Export-Activity-M-1H-2018-1H-2021.png 549w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/India-Solar-Cell-and-Module-Import-Export-Activity-M-1H-2018-1H-2021-300x206.png 300w" sizes="(max-width: 549px) 100vw, 549px" /></a>
For a more in-depth look at the Exim data by country and charts, subscribe to our quarterly market report – <a href="https://mercomindia.com/product/q2-2019-india-solar-market-update/" target="_blank" rel="noopener">Mercom India Solar Update</a>. Detailed solar import data by component types are available in Mercom’s <a href="https://mercomindia.com/product/india-solar-export-import-tracker/" target="_blank" rel="noopener">India Solar EXIM Tracker</a>.

Indian Solar Imports and Exports in 1H Back to Pre-Pandemic Levels

Mercom India’s news team recently had the opportunity to speak with energy solutions provider <a href="http://www.goodwe.com/" target="_blank" rel="noopener">GoodWe</a>’s sales head for south and east Asia, James Hou. Hou shed some light on the evolving dynamics of the Indian solar market.
Here are the edited excerpts from the interview:
Why India, how is India’s business important to GoodWe?
Thanks to the technology development in recent years, solar energy is well accepted and applied globally with a reduction in cost of whole systems, especially with the falling price of PV modules. As one of the major PV markets, India installed close to 9.5 GW solar projects in last year and 2 GW solar capacity is expected  this year in the commercial and industrial markets. We also note that the idea of energy-saving and emissions-reduction is becoming popular in India, which can further support GoodWe’s business.
We are happy to see the rapid development of India’s PV industry. However, when many PV manufacturers flooding into India, a vicious price war between manufacturers has cut margins to the bone. This will disrupt the healthy development of PV industry as well as provide opportunities for low-cost inferior products.
We are focusing very much on big projects, either in the private or government sectors. Such projects would have a higher requirement for quality and service, which would differentiate us from many other players in the market. A very good sign is that EPCs/Developers nowadays tend to care more about the overall strengths of a supplier, instead of just looking at the price.
What products do you offer in India?
GoodWe can offer a comprehensive portfolio of products and solutions for residential, commercial and utility scale PV systems, ranging from 1.0 to 75 kW. GoodWe also provides energy storage solutions, which give customers control of their power, by giving them the choice and flexibility in how they use the electricity grid. By storing excess power during off-peak hours, when electricity costs are at their lowest, clean energy can be enjoyed during peak times while benefitting from a reduction in monthly costs. In addition, the battery storage system provides critical back-up power during grid outages or blackouts.
Which <a href="https://mercomindia.com/string-inverter-indian-solar-market/" target="_blank" rel="noopener">inverters are in</a> more demand and why?
Our MT Series string inverters (50-60kW) are the most popular for India’s C&amp;I solar market, which can be successfully deployed on large scale commercial rooftops and ground-mounted solar PV systems. This can help further reduce installation costs while its boosting its power function, which can provide a higher yield and a faster ROI.
What do you think of the <a href="https://mercomindia.com/rupee-depreciation-affects-solar-supply-chain-india/" target="_blank" rel="noopener">rupee depreciation</a> and how is it affecting business?
Yes, the rupee depreciation has brought greater pressure on the importers. But thanks to the continuous price reduction of components, especially solar panels, projects can still be managed at a satisfying profitability level. The increase of demand for solar energy and continuous government support have been leading the market in a very positive direction, which has made India a standout as one of the most thriving solar market around the globe.
How are policy changes in India affecting the market? 
We feel that the <a href="https://mercomindia.com/industry-challenges-bis-guidelines-solar-modules/" target="_blank" rel="noopener">BIS certification</a> could be a significant change.
What would you like our readers to know about GoodWe?
GoodWe is a leading, strategically-thinking enterprise which focuses on research and manufacturing of PV inverters and energy storage solutions. With an average monthly sales volume of 30,000 pieces in 2017, and 12 GW installed in more than 100 countries, GoodWe solar inverters have been largely used in residential, commercial rooftops, industrial and utility scale systems, ranging from 1.0 to 75 kW. GoodWe inverters offer reliable operation and excellent performance and are well recognized by customers worldwide.
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Rising Competition in India’s Solar Market has Cut Margins to the Bone: Interview

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