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Reduced focus of the US on green energy initiatives could significantly suppress solar panel demand, worsening global supply-demand imbalances and eroding price premiums in the US market, which have long benefited Indian solar exporters, says a report by SBI Caps.
According to the report, one of the key risks identified is the possible withdrawal of the US's Inflation Reduction Act, which could create dual challenges for Indian solar manufacturers. The US is a major export destination for the Indian green energy companies. While it may erode export margins due to less favorable market conditions, the move could also result in overseas facility write-downs for Indian exporters, said the report. On the flip side, a decrease in US domestic capacity expansion could create opportunities for Indian producers to fill the gap and increase market share in the US. The report also discusses the rise of European Ultra-Low-Carbon Footprint (ULFP) adoption, which offers an alternative market for Indian solar exporters, mitigating the potential risks from a downturn in the US market. However, it notes that export-oriented companies are still exposed to heightened downside risks, particularly with the ongoing volatility in global geopolitical dynamics. The solar component ecosystem, the report points out, remains lucrative with significant growth expected in the medium term. However, the market is not without its challenges. It warns that beneath the industry-wide optimism, a complex landscape exists with various sub-segments, each facing its own set of trade-offs. As per the report, for the Indian solar manufacturers, integrated players--who control multiple steps of the supply chain--are in a stronger position to tap into Domestic Content Requirement (DCR) markets, where margins are higher. On the other hand, pure-play module makers, who rely on utility volumes and exports, face a more challenging path, added the report. (ANI)
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