Last week, the Chinese government announced that it was cutting
Furthermore, China does not have the adequate transmission infrastructure to support all this solar power generation. Its power grids are heavily overused. The policy will likely be rolled back once additional infrastructure is built.
A supply glut of solar equipment
Given China’s status as the world’s largest producer of
The move is also expected to result in a dramatic
And, this is why the policy could be beneficial for India.
India is one of the largest consumers of Chinese solar cells and modules. In fact, around 80-85% of the inputs for its solar projects come from countries like China and Malaysia due to a lack of domestic manufacturing capacity.
The reduction in the price of solar equipment will lower the costs for Indian solar power companies, and give the government’s renewable energy plans a much needed boost. The government recently raised its renewable energy generation target from 175 gigawatts to 227 gigawatts by 2022.
Indian manufacturers stand to lose
Once again, India’s domestic manufacturers of solar power equipment stand to lose. They simply can’t match the prices and quality of their Chinese counterparts. They were dealt a blow last week when the Indian government decided against levying a 70% duty on imports of solar cells and modules.
The crash in the prices of Chinese solar cells and modules will hurt them even further. As they face the threat of being completely shut out of the market, the Indian government will have no choice but to support them with generous subsidies - the complete opposite of what China’s doing.