To achieve its 100 GW of installed solar power capacity by 2022 from around 10 GW end of 2016, India is apparently thinking now about all possible efforts - including a reported plan of launching a massive 20 GW tender. (Photo Credit: TaiyangNews)
- Indian government is apparently contemplating issuing a mega tender for 20 GW of solar power capacity
- Tender is reported to be already in the planning stage and MNRE plans to award capacity to those developers who offer lowest tariffs
- Projects awarded under this proposed tender would be constructed and commissioned in phases
- This is supposed to support local solar power manufacturing industry while also helping the overarching program of Make In India
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In an effort to support domestic solar power equipment manufacturing industry, the Government of India (GOI) is apparently thinking about launching a tender at an incredible size of 20 GW of PV capacity in one go – at least that’s a story in Indian business paper Mint. India targets 100 GW by 2022 – and had nearly 10 GW installed end of 2016.
The idea is to back Make In India plans of the current administration, a brainchild of Prime Minister Narendra Modi. It would also help further bring down solar power tariffs that have already gone below 3.00 INR ($0.0461) per kWh. The lowest solar power tariff achieved here was in May 2017 during 500 MW Bhadla Solar Park Phase III capacity auction (see ACME Wins 200 MW At 2.44 INR Record).
Mint quoted an unnamed senior government official who confirmed that the government is mulling the idea of mega bids. The Ministry of New and Renewable Energy (MNRE) is reported to be currently in the process of working on the tender. It would award capacity to developers who will quote the lowest price for selling grid connected solar power. Projects would be commissioned in phases. However, it is apparently not yet clear if this will only comprise large scale solar power capacity alone or rooftop tenders as well
As to how this will help local manufacturing, Mint quoted another person who stated that these projects will be constructed in phases. “Once people see visibility of such projects, then manufacturing can kick in,” stated this person.
As per MNRE, current operational solar cell manufacturing capacity of India as on May 31, 2017 was 1.6 GW and that of modules was 5.5 GW. With the US International Trade Commission recommending up to 35% tariffs on imported solar cells and modules, it has set a precedent for an anti-dumping case that India could follow (see Anti-Dumping Investigation Begins In India).
If really happening, it is likely that developing such a huge capacity would mean developers will continue to import modules. IHS Markit Analyst Dharmendra Kumar explains that module manufacturers would want anti-dumping duty (ADD) to be applied only on module imports and not on cell imports. The manufacturing capacity of the latter is very limited as of today.
“At present imported module prices are running around $0.36 to $0.40/W, if an ADD is applied, the prices will hover around $0.38 to $0.42/W. This will ultimately increase the average solar projects in India by INR 1.00 to 1.50 per unit. Solar tariff rates are currently running around INR 2.50/unit to 3.50/per unit, once ADD is applied, the same price will shoot-up to INR 3.50/unit to INR 4.50/unit, which India can’t afford,” said Kumar. “ In case ADD is applied on cells/wafers, then local manufacturing cost within India will also shoot up.”
Newly sworn in MNRE Head Raj Kumar Singh had announced in September 2017 that his government plans to come out with auctions for 20 GW each for solar and wind by December this year. While the idea would be something like manna from heaven for developers who often have to wait long times for tenders to flow in, the practical problems that they already face post tenders is something to worry about.
Another local newspaper, Hindu Business Line reflected in an earlier article that the solar industry feels central and state governments are not on the same page on these issues. The industry also blames former MNRE head Piyush Goyal for not drafting bid rules properly, it stated.
However, even at the current speed of deploying solar there are a lot of issues the government still has to solve. Non-signing of PPAs by offtakers, problems in securing land for PV projects and grid curtailment are just some of the issues being faced by developers. Electricity distribution companies (discoms) have been known to have asked developers to sign PPAs for a lower tariff than what they won the capacity for (see TANGEDCO Wants Retroactive Solar Tariff Cuts).