Two developments have taken place in the last few days in the US that are of interest to the Indian solar industry, and could potentially shape Indian manufacturing policy and Indian developer's decision choice of products.
Class action against First Solar
First is a class action suit filed against the US solar module manufacturer First Solar, which has large sales in India. The suit has been filed by a New York-based law firm, Pomerantz, Haudek, Grossman & Gross, on behalf of a group of investors. The suit has been filed against the top officials of the company for “failure to disclose material adverse facts about the company's business, operations and prospects.”
First Solar recently said in an analyst conference call that it had incurred a charge of $164 million for warranty payments to replace defective equipment, including a reserve of $37.5 million to cover future claims. It had said that it experienced higher than expected failure rates of its panels in hot climates.
Basically, the lawsuit's case is this: If you had disclosed performance issues with your products we wouldn't have brought your shares from the market. So, compensate us. The law firm seeks to bring relief to people who bought the First Solar share between April 30, 2008 and February 28, 2012.
As is well known, last September, First Solar won an order from Reliance Power to supply 100 MW worth of thin film modules. The deal was backed by $84.3 million (Rs 375 crore), 16.5-year loan by the US Exim Bank. First Solar has orders worth more than 200 MW in India. Azure Power is another Indian developer that is buying First Solar's products. ACME Tele Power Ltd, which announced last week the completion of a 15 MW project in Gujarat, is another customer of First Solar.
It is not yet clear as to how many developers who won projects in the second round of bidding under the National Solar Mission, are opting for First Solar's products, but it is common knowledge that most of them are prefer ‘thin film' technology to ‘crystalline silicon', because of an unintended skew in policy: developers are free to import thin film panels, but if they go in for crystalline silicon, they have to buy locally.
US imposes tariff on Chinese products
The other development is that the US Commerce Department has imposed tariffs on solar panels imported from some named Chinese firms – 4.73 per cent to Trina, 2.9 per cent to Suntech and 3.59 per cent to all others. The duties meant to countervail the Chinese Government subsidies and benefits to the companies. The US has not yet imposed any anti-dumping duty – a decision on that has been put off to May. The decision would be taken at the end of a process that seeks to determine if the Chinese are selling into the US below at prices lower than the cost of manufacture.
Again, this development has the potential to influence India's manufacturing policy as the local industry has been saying that the Chinese firms, backed by support from their governments, are taking their business away.