Imposing a 70% safeguard duty on imported solar cells is likely to increase project costs by more than 35%, warns Mercom. The ambiguity surrounding the safeguard duties are apparently affecting major PV tenders in India, leading to fewer bids. (Source: Mercom India Research)
- Ambiguity surrounding safeguard duties are apparently affecting major PV tenders in India, leading to fewer bids
- Karnataka, Bihar and Maharashtra state tenders have received a low level of response from bidders, with only two companies bidding for 100 MW each in the 1.2 GW Karnataka tender
- This has led to extended deadlines for tenders in Bihar, Maharashtra and Karnataka
- The government’s inaction on clearing the air about imposing safeguard duties and the ongoing anti-dumping investigation has made developers wary of taking on more work and bidding competitively
- Developers are waiting for the government to clarify whether power purchase agreements (PPAs) signed before safeguard duties are imposed will be honored
India's Ministry Of New & Renewable Energy Receives Green Signal To Implement Phase-III Of Off-Grid And Decentralized PV Applications
(08. June 2018)
Indian Government Allays Fears Of Imposing Safeguard Duty On Imported Solar Cells From China & Malaysia
(03. June 2018)
SECI To Implement Scheme For 2.5 GW ISTS Connected Wind-Solar Hybrid Power Projects To Support National Wind-Solar Hybrid Policy
(31. May 2018)
Fears surrounding impending safeguard duties and the ongoing anti-dumping investigation in India have finally started to impact the PV market, even before official conclusions have been announced. More than 2 GW of solar power tenders are bearing the brunt of the uncertainty surrounding duties, with bidders holding tight until clarity is provided, according to Mercom Capital Group.
Mercom says “unenthusiastic bidder response” has led to bid-submission deadlines for tenders in the states of Bihar, Maharashtra and Karnataka to be extended. These tenders include 1 GW of capacity tendered by Maharashtra Discom MSEDCL in December last year (see Maharashtra Utility Tenders 1 GW PV). The bid submission deadline has been extended from Jan. 20, 2018 to March 9.
Another big tender from Karnataka Renewable Energy Development Ltd. (KREDL) with 1.2 GW of PV power has also shifted the deadline to March 5, 2018, from the previous date of Feb. 21, 2018 (see 1.2 GW Of PV Tendered In Karnataka). It has also relaxed some of the conditions of the original tender.
Local business daily The Economic Times (ET) revealed only Azure Power and Shapoorji Pallonji have bid for 100 MW each in the Karnataka tender. With such a “tepid” response, the agency had to recall the tender and re-issue it with relaxed conditions. ET noted that some companies are not happy with the fact that KREDL has not specified “the provision of tariff change if there is a change in the law.”
The Bihar Renewable Energy Development Agency (BREDA) has also extended the bid submission deadline for the 40 MW rooftop PV tender owing to the low number of bids received.
Additionally, another 860 MW of capacity auctioned by KREDL has been put on hold by the Karnataka High Court as the result of a technical glitch that barred 1 company from bidding (see Indian State High Court Stay On 860 MW Auction).
Safeguard duty for solar cells causes uncertainty
Acting on the petition filed by the Indian Solar Manufacturers Association (ISMA), the Directorate General of Safeguards, Customs and Central Excise had recommended a 70% safeguard duty on imported solar cells from China and Malaysia (see India Contemplating 70% Safeguard Duty). Even though the Madras High Court put a stay on the recommendations, the anxiety among bidders is palpable (see Call For Safeguard Duty Runs Into Legal Tangle).
This comes on top of the anti-dumping investigation that has plagued the Indian solar industry for months now (see Anti-Dumping Investigation Begins In India).
“The proposed safeguard duty would immediately raise the cost of modules and the project cost depending on the level of tariff,” said Raj Prabhu, CEO of Mercom Capital Group. He added, “A 70% safeguard duty could increase total project cost by over 35 percent but developers have no way of knowing what this additional cost could be so they can adjust their bids accordingly.”
Developers are looking to receive clarity on the situation from the government, particularly in respect to whether power purchase agreements (PPAs) signed before the official imposition of the safeguard duty will be affected.