April 3 (Bloomberg) -- Indian solar-power developers and their suppliers will meet with government officials to try to resolve a price dispute that risks handing ammunition to U.S. exporters complaining they face unfair trade hurdles.
The officials will meet with both sides this week, said Rajendra Nimje, head of state-run Solar Energy Corp. of India, which ran the central government’s $900 million auction of solar permits for 750 megawatts of capacity in February.
Tata Power Solar and Indosolar Ltd., among India’s largest solar-cell makers, denied raising prices after projects were awarded at the Feb. 21 auction that also required half of the capacity to be built using equipment from domestic producers.
“I categorically deny that Indosolar has raised prices recently,” Managing Director H.R. Gupta said in an interview. Developers may have got unreliable quotes from contractors or panel makers when preparing their bids, Tata Power Solar, a unit of India’s biggest industrial group, said in an e-mailed response to questions.
The National Solar Energy Federation of India accused cell makers of raising prices after the auction in a letter to the Ministry of New and Renewable Energy copied to Bloomberg News. The ministry confirmed it received the letter.
The dispute risks aiding U.S. efforts to dismantle the auction rule that seeks to boost local manufacturing by restricting some imports. The U.S. filed a complaint at the World Trade Organization saying India unfairly protects local producers. India is also paying higher subsidies for projects won at the February auction using domestic content.
Indian solar-panel prices rose about 15 percent to 16 percent after permits were awarded at the sale, making projects won unprofitable, according to the letter from the lobby representing developers and panel makers.
“Developers are facing tremendous challenges,” the group said. About 65 percent to 70 percent of the projects may not be built because local cell makers lack capacity to fulfill orders, it said. Banks also don’t want to lend to projects using Indian-made equipment because of quality concerns, it added.
The lobby wants the government to almost double the time allowed to complete projects using local equipment to two years.
Indosolar and Tata Power said the price of wafers, a key import used to make solar cells, have risen. Term sheets issued to 23 panel makers since December allow for any gain in wafer costs to be passed on, according to Indosolar’s Gupta.
The average benchmark world price of multicrystalline wafers rose 8.6 percent since December to $1.01 each this week, according to data compiled by Bloomberg New Energy Finance.
As long as orders are placed by the end of April, the domestic industry can supply enough equipment on time to meet the program’s needs, according to Tata Power Solar. “Delaying of the ordering process by developers would put the entire program in jeopardy,” it said.
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