“Solar energy” may just end up being “Mr Dependable” for India’s energy transition, if the narrative of the government as well as the industry is accepted. The government, on its part, is leaving no stone unturned to make it easy for those who want to invest in the segment, but there is a hitch as far as input costs are concerned — domestic content versus cheap imports.

On October 16, the Ministry of New & Renewable Energy’s Grid Solar Division came out with an office memorandum on penalties for violation of domestic content requirement (DCR) norms for solar photovoltaic (PV) power projects under the Ministry’s schemes and programmes. The government has been encouraging domestic manufacturing of solar PV cells and modules, wherever permitted by the WTO.

To prevent misuse of the policy, the Ministry, in February 2018, decided that with respect to solar PV power projects under its schemes/programmes, any violation of the DCR provision will lead to filing of criminal case under IPC, blacklisting of the developer for 10 years, forfeiting of relevant bank guarantee, disciplinary case against the officers of the Central public sector undertaking or State government concerned, and any other action, in addition to the above.

Despite this 2018 guidance, there have been instances of cheap imported products being used. Though the government is implementing the Production Linked Incentive (PLI) scheme for achieving manufacturing capacity of gigawatt (GW) scale in high efficiency solar PV modules with an outlay of ₹24,000 crore, it will take time before India actually gets sufficient production capacity.

The latest office memorandum is applicable to the earlier identified DCR-based projects. The intent is to bring the domestic products on a par with the imported ones, especially cheap Chinese cells and modules. However, the Ministry has exempted solar power project developers form the requirement to procure solar modules from those manufacturers who are in the Approved List of Models and Manufacturers (ALMM). This was as part of a broader effort to make it easy for projects commissioned till March 31, 2024.

Now, if the landed cost of Chinese PV modules continues to remain similar to that of domestic manufacturers, then there may not be any comparison to make on cost, but efficiency could be a point of comparison. For the domestic players, the focus will be not only to be cost competitive but also produce efficient products. According to some industry observers, the government plans to register only solar panels that have domestically manufactured cells, wafers, and polysilicon in order to be registered under the ALMM.

This is part of the broader effort to boost domestic manufacturing of solar panels and promote the ‘Make-in-India’ initiative.

According to Subrahmanyam Pulipaka, CEO, National Solar Energy Federation of India, “Since government schemes involving subsidies and incentives mandate DCR, it is imperative to follow the DCR rules. I think this notification is to strengthen the enforcement of DCR in various schemes.”

“India, over the last two years, is slowly emerging as one of the largest manufacturing bases for solar manufacturing in the world. While the vertical integration of the solar modules to the cell level and below has always been a challenging, thanks to PLI I and II we will be in a position to overcome this challenge by the end of 2024, especially when it comes to cell. As per NSEFI figures, India will see an increase in domestic cell manufacturing to around 20 GW by the end of 2024 or early 2025,” he said.

Much more dependable

The New and Renewable Energy Minister, RK Singh, in his capacity as president of International Solar Alliance (ISA), recently said: “Our experience shows that among renewable sources, solar has the edge; it is much more dependable, reliable and available for more months of the year.”

The Minister had also said that solar energy is capable of being deployed in small sizes which makes it the best suited for ensuring energy access. “When we launched our campaign for universal access to energy, solar played a major role. It is using solar that we lighted many homes in the hills and in the deserts. It has ability to be deployed for specific villages in mini-grids. For universal access, solar is the solution...,” the Minister said.

Director General of ISA, Ajay Mathur, had said that the ISA is supporting the growth of 9.5 GW solar energy in projects across the world. “More important is supporting the institutional development for these projects. This involves setting up institutional infrastructure for bidding, framing of regulations, demonstration projects and capacity for running the projects. There are various kinds of capacity building programmes which are underway...”

Speaking about investment in solar energy, the DG of ISA had said that solar witnessed an investment (global) of $310 billion last year and that it is expected to be $380 billion this year.

He had further said that the problem is that most of the investment is happening in OECD countries and in China. “We need to hence address how the rest of the world can adopt solar. Two, most of the investment is happening in large solar; we need to also focus on how we get to small solar such as solar rooftops and solar mini-grids off the ground. Third, there is a concentration of manufacturing in one or two countries; we need to see how we can make this more geographically diversified,” he had pointed out.

Given their import dependence on fossil fuel, for countries like India it is all the more important to create and strengthen the base in other energy resources. India has been working on it, but what will also help in further strengthening its self-reliance in other energy resources is policy consistency in making the segment cost-effective.

Given its import dependence on fossil fuel, it is all the more important for India to create and strengthen its base in other energy resources

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