Solar cos see potential to scale up; want Govt to tweak safeguard norms

V Rishi Kumar Hyderabad | Updated on July 21, 2020

‘Firms well placed to substitute Chinese imports’

The domestic solar manufacturing companies are looking for some policy tweaks to make them more competitive, paving the way for a surge in investments, while ensuring import substitution, according to a senior executive of a leading domestic solar company.

The cost of solar power has come down to ₹2.30 per unit discovered during recent bids, making it actually cheaper than other sources of energy and with the potential to supply at the same tariff for a minimum of 25 years from the time of implementation.

“This should enthuse the Central Government to come up with policy tweaks that will encourage Indian manufacturers, who have been waiting for this opportunity for a long time. This will trigger a new wave of investments in the country and boost domestic solar manufacturing while saving big on forex,” Saibaba Vutukuri, Chief Executive Officer of Vikram Solar, said.

He told BusinessLine, “It is high time the government looked at transforming the solar power sector like what they did to the automotive sector, offering some concessions and imposing some select barriers.”

The government’s intent is there but the implementation needs to get much more cohesive, ensuring that the domestic solar manufacturers take to backward integration projects without having to be dependent on imports. Currently, a big chunk of the imports are from China. And the recent geopolitical strain could be utilised as an opportunity to harness the potential of Indian manufacturers. Many of them are looking to expand, including Vikram Solar, but awaiting new policy guidelines, he said.

“We need to get into the mode we were when we started the Indian solar journey with ₹18-19 per unit tariff. Let us assume that the solar tariff is say ₹2.60 or even ₹2.80 per unit, it is still a workable proposition provided domestic manufacturing grows. Most of the companies are waiting to expand,” he said.

“The country has close to 9 GW of module manufacturing and about 3 GW of cell line capacity. We don’t have any manufacturing in wafers, ingots and polysilicon. All of it is imported. Within a short time, it still be possible for domestic companies to ramp up to the capacity required in the country of about 15-20 GW per annum,” he said.

Domestic manufacturing is at a disadvantage as they can access funds at 11-12 per cent interest, while the Chinese get it at 5 per cent. Therefore, the domestic manufacturers feel there is a need for tariff and non-tariff barriers, he said.

“About 30 years ago, three India PSUs — BHEL, CEL and BEL — had the capability to make modules, when China had no firm to do so. But look at where they have gone and how we slipped. The government should address issues relating to domestic manufacturing, and within five years it will be able to save billions of dollars in forex now being spent on solar gear imports,” he said.

According to our estimates, India will be able to save about $18 billion over the next five years if domestic manufacturing invests $5-6 billion in capacity expansion and backward integration, he said.

Vikram Solar has capacity for 12 GW of module and we are in the process of adding cell and additional module manufacturing capacity, while also looking at backward integration into ingots, wafers and cells, he said.

Published on July 21, 2020

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