Solar Tender Ceiling Price Raised to Lure Developers

Will it Work this time?

The state of solar manufacturing is pitiful in India. Though the government is trying hard to improve the situation, very little has been done in this direction. India still imports more than 90% of its panels from outside, despite being the second largest market in the world for solar panels. The ministry recently imposed a 25% safeguard duty on imports from neighboring countries like China, in order to support domestic manufacturing. The Indian manufacturers have mostly given up because the price difference remains huge between the massive Chinese giga-scale plants and the smaller older Indian plants.

In another move to support manufacturing, SECI had announced a manufacturing linked solar scheme. The first of its kind manufacturing-linked solar tender was introduced in July by the SECI, auctioning 10,000 MW linked to 3,000 MW of solar equipment manufacturing. However, despite the dates being extended for numerous times, the tender failed to gain enough traction. Though the idea was good, the policies underlying it were not very clear. For instance, there is little interest as the conditions are cumbersome and there is no clarity on what one would do with this 3 GW of manufacturing, once the solar projects are built. Now, SECI has raised the tariffs for these projects by 10 paise per unit, to attract developers.

Also, read Recent Tender Cancellations – Bad Omen For The Indian Solar Industry

With rising interest rates and falling rupee, this increase would hardly make a difference. The ceiling tariff for hybrid projects has now been fixed at INR 2.70 per unit, while that for manufacturing-linked solar projects has been raised to INR 2.85 per unit. With the earlier ceiling tariff fixed at INR 2.60 per unit, the auction has been postponed six times already. The auction size has been reduced to 1200 MW now from 2500 MW in May. The deadline for commercial bids is November, 19th. SECI determining the cap could deter developers again. Instead, market forces should have been trusted in order to make the whole process more profitable and competitive.