By Sravya Vemuri
LONGi Green Energy Technology Co. Ltd, one of China’s biggest makers of solar panels, recently announced that it would be setting up a solar equipment manufacturing unit in India. The facility is proposed to be set up in Andhra Pradesh with an investment of $309 million to produce 1GW of monocrystalline silicon cells and modules each.
Rise in solar hegemony
The proposal, initially to be set up in the United States of America (USA), came as a result of the approval to impose 30 percent additional import duties on solar equipment made outside the USA. This is second such blow to the renewable energy sector after the US pulling out of Paris climate change deal. The objective of this decision was to raise the costs of cheap imports and level the playing field for those who manufacture the parts domestically. This is a setback to foreign manufacturers, especially from Asia. About 80 percent of US solar installations are imported panels. The biggest market holder is Malaysia with 36 percent followed by South Korea at 21 percent and China at 9 percent.
Finding new markets
Due to the imposition of tariffs in European Union (EU) countries and the USA, China had two options to continue with its solar production: One, increasing domestic installation and two, finding new export markets. As a result of the import duties, Chinese and Malaysian manufacturers are seeing India as a hub to sell their products. This will adversely affect the Indian domestic producers of solar equipment. It is very apparent that Chinese solar equipment has fostered the use of renewable sources of energy in countries like the USA, EU countries, India among others by providing the products at cheaper costs. However, this would impact the domestic production.
Temporary safeguard tariffs
On January 5th, the Directorate General of Safeguards proposed to impose a 70 percent “safeguard duty” on the imports of solar products from China. This is to be a temporary duty for 200 days. However, the Ministry of Renewable Energy has raised its concerns. For India to achieve its ambitious goal of generating 175GW of renewable energy by 2022, we need more equipment for solar energy production at every level. This is perplexing as the country has to decide between two important issues.
Green energy trade war
In the near term, the Trump administration’s tariffs are going to raise the cost solar and hinder the pace of solar installations in the USA. As this imposition is legally ambiguous, Taiwan and South Korea filed a complaint with the World Trade Organisation (WTO). Another consequence of this tariff is a potential trade war with China and other countries.
India is seen as a most promising solar market for the manufacturers but the low-cost Chinese products have hindered the goal of the Indian government to create its own suppliers. According to government data, imports mostly from China account for about 90 percent of the last year’s sales. This is a huge amount to consider. Bearing in mind the fact that India needs cheaper technology to make use of its renewable sources of energy, the tariff rate can be considerably decreased so as to minimise the effects of it.
Featured Image Source: Pexels
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