US cautions against lure of cheap Chinese solar imports

Solar energy developers in India should consider quality, service standards, overall costs and geopolitical implications before going for cheap Chinese imports, a top US official said.

Considering these factors, the US can offer better value to Indian solar developers, Francis R Fannon, assistant secretary of state for energy resources, told ET.

“When you are doing business, you have to look at: is this a commercial endeavour, or is this something else, and how is this deal being financed? Is it because the company is there to get returns, or is there any kind of government backing, in which case it has geopolitical implications,” he said.

Reliability and cost of decommissioning were also important considerations, Fannon said. “They might be 5% cheaper, but I now have a 20% decommissioning issue or reliability degrades by the years. So, is it really a smart investment?”

He said US companies had a lot to offer. “When a US company enters any market, they win in a competitive way, they tend to bring the best environment health safety standards, they tend to be the best operators, the best innovation, the best engineering, and they respect the sovereignty of the countries they are operating in,” Fannon said. “These are all concepts that need to be considered.”

Fannon, the top official for energy matters in the US state department, was in Delhi for the launch of the Flexible Resources Initiative (FRI) under the US-India Clean Energy Finance Task Force. FRI, part of Asia EDGE (Enhancing Development and Growth through Energy) initiative, aims to develop effective strategies to ensure India’s power system has the flexibility it needs to integrate renewable energy over the next decade, while reliably meeting surging demand.

Fannon said US was a rapidly growing energy supplier, which would double export capacity in three years, potentially benefitting India. “If there’s a suspicion about reliability of US energy maybe it’s because US is relatively new to this game,” he said. “The US started exporting energy in 2016. At that time, we were the 15th largest exporter. Today, after two and a half years, we are third. And we are projected to be the first in 3-5 years.”

India is also increasing imports of crude oil from the US, and recently Petronet LNG signed an MoU for US gas imports, which led to a sharp fall in the company’s shares in a bullish market as many analysts said buying US LNG was not a smart idea.

Fannon said he had discussed solar energy issues with Indian officials. “I can’t go into specifics of my discussions, but the issue of solar is certainly one of that and the fact that the government is keen to have the private sector being an important voice in this, is telling by itself.”

He also lauded India for stopping oil imports from Iran, which he claimed had hurt Indian consumers by attacking facilities in Saudi Arabia, a major supplier to the country. “We understand that some of the private sector participants in India made a reluctant agreement,” he said, but added that “there couldn’t be a more unreliable supplier” than Iran.

Fannon said US energy supplies were changing the market dynamics. “We are about to double the export capacity in next three years, (and) at the same time, we are doubling the recovery rates of gas from some of our most prolific basins in the US in the next five years,” he said. “So, all of this is driving down costs, increasing flexibility for global consumers, and changing the way gas is being marketed.”