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All is not well in India’s target towards 500 GW Renewable Energy by 2030 – EQ Mag Pro

All is not well in India’s target towards 500 GW Renewable Energy by 2030 – EQ Mag Pro


India has committed a target of installed capacity of 500 GW of generation from non-fossil fuel-based generation sources by 2030 as stated by Hon’ble PM in Glasgow COP 26 Summit.This would mean an additional 230 GW of new solar energy installations by the year 2030.

The same translates into an effective target of 28-30 GW of new capacity per annum till 2030. Considering the AC:DC ratio, the target for solar modules availability is even further steep and is expected to be around 40 GW per annum.

However, the present module manufacturing capacity in the country is estimated to be less than 20 GW per annum. With restrictions such as ALMM, the quantity is further restricted. The current domestic manufacturing is grossly insufficient to cater to current demand. The cell manufacturing capacity is estimated to be a meagre 2-3 GW, while rest of the upstream manufacturing capacity (polysilicon, wafer) is negligible.

India’s goal of affordable and clean solar electricity is threatened by shortages and high price of solar panels. Domestic solar manufacturing industry is predominantly modules only. Many developers feel that cost of domestic modules is not being decided on cost plus basis rather on cost of BCD loaded imported modules; leading to higher prices across the board. The ALMM notification which has led to profiteering, concerns for which has been repeatedly been raised by the Honourable Minister of Power and Renewable Energy, the present exclusion of the solar power projects from the Project Import Scheme by the ministry of finance will further increase the profiteering in the modules sector even for the lower efficiency modules increasing unnecessary financial burden on the common public by way of increase of cost of solar power.

Recent amendment to project import Regulations, 1986 effective from 20th October 2022 singles out solar projects from the purview of availing the benefit of importing power project equipment at concessional duty rates. Project import regulations has been legitimate way available to the all power generators (including the solar based power generators) to import at the prescribed rate. The unilateral move to amend the Regulations and disallowing solar exclusively gives an impression that solar development is being discouraged against the goal of supporting manufacturing. It is estimated that this shall impact close to 20 GW PPAs and India might fall behind in its targeted capacity addition for the FY 23 & 24.

According to an industry insider, given the number of initiatives such as PLI scheme, imposition of high BCD, ALMM and now amendment to project import scheme, almost all PPA tariffs have become unviable. The Government should evaluate both the aspects of its decisions. While domestic manufacturing is already on the way to become self sufficient by 2024-25 end, this was not the time to shut all doors for module import. Project import scheme was a legitimate benefit which has been provided historically to all power projects. Singling out solar projects as exclusion has dampened the mood of investors. This move could have come at a time when domestic module manufacturing became sufficient to cater to domestic needs without artificial price jack-up.

Given the impact to ongoing projects worth ₹ 25,000 Crs, and wider impact to investors sentiment, the move has been seen negatively by the developer community.These projects are now in jeopardy. Even for the future project developments, higher tariffs are expected and the cost of the same shall ultimately be born by the ailing DISCOMs of the country.

Anand Gupta Editor - EQ Int'l Media Network