The Cabinet Committee on Economic Affairs (CCEA) has approved a Rs 8,580 crore scheme under which companies owned by the Central Government will set up 12,000 MW of solar power plants over the next four years using India-made solar modules.

This is to provide a boost to local solar module manufacturing industry which has been listless ever since India lost its case at the World Trade Organisation (WTO) over mandatory local procurement for certain solar power projects.

With this, the Government has made good a promise it had made as a proposal via a December 2017 ‘concept note’ of the Ministry of New and Renewable Energy (MNRE).

“The 12,000 MW or more capacity of grid connected solar power projects will be set up by the Government Producers in 4 years period, i.e. 2019-20 to 2022-23, as per the terms and conditions specified in Government Producer Scheme,” stated a statement issued on Thursday by the Centre .

“The Scheme will mandate use of both solar photovoltaic cells and modules manufactured domestically as per specifications and testing requirements fixed by MNRE,” the statement said. (These cells, made by etching electricity-conducting lines over ultra-thin silicon wafers, are connected together and made into modules, which are the sun-facing blue panels that we see in solar plants)

The scheme is expected to engender investments of Rs 48,000 crore and create around 200,000 jobs.

This scheme is on the lines expected.

In 2017 – December 14was the deadline for complying with the WTO ruling – India had 1,436 MW of solar projects built with local modules under the ‘domestic content requirement’ rule, with another 1,000 MW under construction. Of course, individuals and companies have always been free to use local modules, but that ‘voluntary’ market has never been much.

Now, with the CCEA approving the Rs 8,580 crore viability gap funding for government-owned companies putting up solar plants with local modules, the domestic manufacturers will get some support.

Most of the Indian solar manufacturers make only modules using imported cells. The leading companies are Tata Power Solar, Vikram Solar, Waaree Energies, Indo Solar and Surana Solar (the last two are listed.) Some of them (ex: Tata Power Solar) also have cell manufacturing capacity. India has about 3 GW of cell and 9 GW of module manufacturing capacity, though only 1.5 GW and 3 GW of them, respectively, are actively in use.

MNRE’s concept note touched upon poor technology with India. “(Dometic) capacity is not being fully exploited because of obsolete technology as the existing capacity is mainly under the conventional technology of multi-crystalline Al-BSF (Aluminium-Back Surface Field) solar cells, which have efficiency limitations. Very few players have ventured into the superior PERC (Passivated Emitter Rear Cell) technology,” the concept note said.

While the statement issued on Thursday mentioned nothing on whether the PSU support would be for modules or cells too, the concept note speaks of pushing local manufacturing gradually up the value chain. For example, it speaks of mandating that in 2018-19, 40 per cent of modules under government-sponsored domestic support schemes to be made with locally produced cells. This percentage may be increased by 20 per cent every year. Though, the note said this in the context of rooftop projects, this is likely to be made applicable for all projects.

Sunil Rathi, Director, Waaree Energies has observed that the 12 GW support would start helping the domestic industry probably after a year, because of the time it takes to finalise and set up projects. “While noting that the Government’s move would be good for the industry in the long run, it fails to provide the much-needed immediate support to the sector, due to which, mid-scale players may not be able to sustain the pressures for the next year,” Rathi has said in a statement.

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