India’s Anti-dumping Investigationand ImpactsonSolar Industry

In August 2012, according to India’sMinistry of New and Renewable Energy (MNRE), India has crossed 1GW ininstallations. In 2010, the Indian government approved its first solar powerplan called the “Jawaharlal Nehru National Solar Mission”(JNNSM), which aimedat increasing the solar power capacity from less than 5MW to 1GW by 2013, and20GW by 2022.

In November 2011, in a statement made bythe MNRE minister Farooq Abdullah, he clarified that “local content” or “domesticcontent” provisions would come into force only if the purchase of solar powerwas made through NVVN (NationalVidyut Vyapar Nigam), which is a designatedpurchaser of energy from projectsunder JNNSMPhase I. The minister has also clarified that there were no generalimport restrictions and the government had already made solar products importtax-free commodities. At the time,the minister reiterated that guidelines forJNNSM were applicable to solar photovoltaic silicon modules for the duration ofPhaseI of the projects. Solar silicon cells were to be classified as domesticcontent for the second batch of PhaseI; however, the policy has exemptedthin-film products from those limitations, favoring companies like American First Solar (NASDAQ:FSLR)in theprocess.

To date, domestic concerns included qualityissueswith installationsof solar plants made by local companies, as in the case ofTata Power Delhi Distribution (TPDD)managingMoser Baer PV. TPDD had awarded threesolar projects to Moser Baer and afterwards complainedthat receivedplants werebelowindustry standards.  Moser was faultedfor not meeting its deadlines and using poor quality machinery and manpower,which has resulted in high system losses of guaranteed electricity. Further,the developer allegedly failed to offer adequate customer service and supportto the clients.Beyond this, there wereconcerns over the pace of the JNNSM,its domesticcontent and the minuscule local manufacturing capacity with under 500MW ofmodule and 300MW of cell, to supply for the needs of this and other programs.Thereare at least six concurrent state policy programs and REC mechanisms underwhich developers can supply solar products without DCR.

Due to a lack of experience shown bycompanies bidding for projects, the Indian state of Uttar Pradesh (U.P.) haspublished (August 2012) a draft solar policy offering 1GW of development for experienceddomestic developers, including international operators.  The developersneeded to have prior capital investments ranging from INR100M (EUR1.5M) toINR500M (EUR7.7M), depending on the size of the project bid for, on grid-connectedsolar power projects. This reduced eligible entities in India to only thosedevelopers who were commissioned for projects under the JNNSM and otherpolicies. International developers, especially those from the US, Germany andChina,were able to qualify.

On November 23, 2012,India’s Ministry ofCommerce and Industry said there was sufficient evidence to warrant aninvestigation into the dumping claims filed by local manufacturers Indosolar Limited(NSE:INDOSOLAR), Jupiter Solar Power Ltd. and Websol Energy System Ltd(NSE:WEBELSOLAR). However,the subject of the investigation is not China only. Theinvestigation willinclude cells made in the US, Malaysia and Taiwan.

First Solarclaims to have a 20% marketshare in the region, which is part of the 1GW installations. The company andthe US banks have been under fire from India’s Centre for Science and Technology (CSE), accusing them of runningIndia’s domestic PV Industry, eliminating local competition by providingfinancing only to the Arizona-based company and using a loophole  in the JNNSM rules to fill the quota with lowefficiency thin-film modules, a controversy  excellently covered in PV-Magazine.Considering the inclusion of Malaysiaunder the investigation, First Solar isunquestionably targeted, having the majority of its manufacturing in thatcountry. 

In comparison to Europe and the US, to dateIndia has played a small part in Chinese exports. In recent announcements,however, the Indian market could have been seen as an offset to dwindlingEuropean volume and,due to levies, the US market.  Despite rumors circulating for months, theannouncement will certainly put another impeding factor on free growth of theindustry. If Taiwanese cells are shown to be dumped into the region, it willalso eliminate the entire value-added potential offered by Taiwan to theMainland China manufacturers using the hub right now to circumvent American tariffs.

For example,Hanwha Q.CELLS brand of cells is made in Malaysia, allowing for afull advantage in the US market for the HanwhaSolarOne (NASDAQ:HSOL). That would not work for India if Malaysian-producedcells had a tariff attached.CanadianSolar (NASDAQ:CSIQ) also purchases cells in the country for the US market.  In the second half of 2011 Canadian Solar delivered33MW of modules to India and continues to ship modules this quarter.

ReneSola Ltd. (NYSE:SOL)has been sending wafers to India to build cells with the objectiveto provide 250MW of domestically assembled modules over the next two years, asannounced in November.  The company outsourcedbusinessto Websol Energy Systems, the complainant named in the case. ReneSola’s case onceagain show an excellent foresight, having limited cell manufacturing andbasically using Taiwan to make its cells for the US market to completely avoidthe US tariffs. Since wafers are going to be the only export to the country, andthose are not in the scope of the investigation, the company will be nottargeted.

Another heavily engaged company isChina Sunergy(NASDAQ: CSUN). Thecompany supplied 45MW of modules to two projects in Gujarat in 2011. This yearSunergy supported the 2^nd India Energy Summit, and CEO Stephen Caispoke of funds for EPC projects to be offered through Sunergy’s channels.

Overall, Chinese exports to India during Q32012 included approximately 53MW of modules, with Trina Solar Limited (ADR)(NYSE:TSL) leading Chinese exporters with30MW of modules shipped in September alone. Trina has supplied to India before, mainly under the Gujarat solar policy.Prior to August, Trina’s estimated shipments were worth 100 MW. Anothersignificantly important quantity in Q3 was the 10MW exported byChint/Astronergy.

In the case of cells, the Q3 exports fromChina were around 20MW;JA Solar HoldingsCo., Ltd. (NASDAQ:JASO)led, whileHareonSolar Technology Co Ltd(SHA:600401)followedas a distant second with 5MW. DeclaredASPof exported solar products during that quarter, when including thin-film, averaged$ 0.70 per watt for modules and$0.54 for cells, totalling $48M for bothcategories.

Chinese export module data for October 2012points to 34MW (details available at SPVI Solar Reports), suggestingrecentefforts to supply more modules have been intensified.BRIDGE TO INDIA, a researchand consulting firm based in India, has stipulated that prior to any actionseen,and not earlier than August 2013, exports to India will see a dramaticincrease to avoid tariffs and to create acondition ofsaturation before 20 to 30% of added penalties can curb future tradelevels.