Updated: 13 August 2020 6:45:34 am
In an indication that pushing the Center ‘Atmanirbhar Bharat’ could yield early results in the solar energy space, the Ministry of Renewable Energy has received proposals from a range of players for over 10GW (giga watts) of fresh solar equipment production.
Proposals over the past two months to produce solar equipment domestically in India include those from the US-based First Solar Network, Gurgaon-based Renewable Energy, Kolkata-based Vikram Solar and Delhi-based Waaree Energy.
This increase in interest in domestic production of solar equipment coincides with government-initiated measures to reduce additional import duties on sectors, including solar energy.
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Minister of Energy and Renewable Energy RK Singh told Indian Express that the government’s move to move from using short-term ‘protection duties’ to protect domestic producers in imposing customs duties has prompted the industry to “undertake long-term commitments in terms of investment ”.
While the government will not formally implement the proposed basic customs duty of about 20-25 per cent of solar equipment, the minister said a 5 per cent interest subsidy scheme for domestic production of ingots, wafer and cells “has gone to the Ministry of Finance He said the changes would be “in line with the WTO”.
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Singh added that a proposal to designate production areas for solar production was also being considered.
While there has been considerable progress in increasing solar capacity since 2014, with India progressively emerging as the third largest market in the solar world, the country’s domestic solar equipment industry has largely failed to capitalize on this opportunity. Despite a 20GW demand for solar cell production, India’s current average annual capacity is only about 3GW, with nearly 80 percent of inputs and components imported from China.
So far, India has only enforced safeguards on imports of solar equipment from China and Malaysia, which have been extended until July 2021 at a rate of around 15 per cent. “We have always felt that a safeguard duty is of limited duration and therefore will not push people to make long-term investment commitments and, consequently, should be basic customs duties,” Singh said. “Once that understanding came out – that what the Ministry of Power has said has been accepted by the government – people started creating productive facilities here,” he said.
Among the new proposals, Vikram Solar is planning to set up a 3GW facility in Tamil Nadu over the next four years to produce solar panels, cells and modules. ReNew Power had also announced plans to set up a 2GW production facility for cells and modules, with the location yet to be completed. Waaree Energies is expected to create a 3GW facility, Singh said.
US solar panel maker First Solar – a major global provider of PV solar systems that has supplied solar panels worth over 20GW globally – has also applied to the ministry for a capacity of about 2.4GW, he said, adding that in addition to these names , there are other proposals with a capacity of about 3-4 GW.
The new proposals are in addition to the capacity to be set by Adani Green Energy and Azure Power through their production-related agreements with the State Solar Energy Corporation of India.
There are about 16 solar cell manufacturers in India, according to Mercom India Research, of which only half have a production capacity of 100 MW or higher.
Despite initiatives over the past two years to stimulate domestic production – the task of storage, domestic policy on content requirements and an approved list of models and manufacturers – the expected level has not materialized so far.
A major reason is that solar cell production is a complex process that is technological and capital intensive. Another reason is that solar cell technology sees improvements every 8-10 months.
Globally, solar production and solar rods are dominated by China, whose companies dominate the Indian solar components market with their competitive prices.
China was the top exporter of solar cells and modules to India in FY’20, accounting for about 78 percent of total product imports ($ 1.68 billion) in the country.
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