Updated: August 13, 2020 6:45:34 AM
This increase in interest in domestic manufacturing of solar equipment coincides with measures initiated by the government to eliminate additional duties on imports across sectors, including solar power.
In a statement that the center’s ‘Atmanirbhar Bharat’ push could produce early results in the field of solar energy, the Ministry of Renewable Energy has received proposals from a range of players for more than 10GW (giga watts) of manufacturing of solar equipment.
The proposals over the last few months to produce household solar equipment in India include those of US-based First Solar, Gurgaon-based Renew Power, Kolkata-based Vikram Solar and Delhi headquarters Waaree Energies.
This increase in interest in domestic manufacturing of solar equipment coincides with measures initiated by the government to eliminate additional duties on imports across sectors, including solar power.
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Power and Renewable Energy Minister RK Singh told The Indian Express that the government’s move to shift from the use of ‘short-term security’ to protect domestic manufacturers from imposing customs duties has caused the industry to “commit to long-term in terms of investments ”.
While the government has yet to officially implement the proposed 20-25 percent customs duty on solar equipment, the minister said a 5 percent subsidy scheme for domestic production of ingots, wafers and cells “has gone to the Ministry of Finance” . He said the duty changes would be “WTO compliant”.
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Singh added that a proposal to designate designation zones for solar manufacturing was also considered.
Although there has been much progress in the addition of solar capacity since 2014, with India progressively emerging as the third largest solar market in the world, the domestic solar equipment manufacturing industry is largely non-existent. managed to capitalize on the opportunity. Despite a demand of 20GW for solar cell manufacturing, India’s current average capacity is only around 3GW, with almost 80 percent of the inputs and components imported from China.
So far, India has only implemented protection rights on imports of solar equipment from China and Malaysia, which have been extended until July 2021 at a rate of about 15 percent. “We have always felt that a duty of protection is of limited duration and therefore will not encourage people to make long-term commitments in terms of investment, and therefore there should be basic customs duties,” Singh said. “Once that sentence came out – that what the Ministry of Power said was accepted by the government – people started setting up production facilities here,” he said.
Under the new proposals, Vikram Solar plans to deploy 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 cell and module manufacturing plant, with the location yet to be finalized. Waaree Energies is expected to set up a 3GW facility, Singh said.
U.S. Solar Panel Manufacturer First Solar – a major global supplier of PV solar systems that has supplied more than 20GW of global solar panels – has also applied to the ministry for a capacity of about 2.4 GW, he said, adding that in addition to this names there are other extensions of about 3-4 GW capacity.
The new proposals are in addition to the capacity that Adani Green Energy and Azure Power must establish through their manufacturing-specific agreements with the state-owned Solar Energy Corporation of India.
There are about 16 solar cell manufacturers in India, according to Mercom India Research, only half of which have a production capacity of 100 MW or higher.
Despite initiatives in the last two years to boost domestic production – the duty of protection, domestic content policy and an approved list of models and manufacturers – the expected set-up has not materialized so far.
An important reason is that the manufacture of solar cells is a complex process that is technology and capital intensive. Another reason is that technology for solar system sees upgrades every 8-10 months.
Globally, the manufacture of solar paper and ingot is dominated by China, whose companies also dominate the Indian market for solar components with their competitive prices.
China was the FY’20 exporter of solar cells and modules to India in the FY’20, accounting for about 78 percent of the total imports ($ 1.68 billion) of the product to the country.
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