Singh was speaking at a video conference organised by the Confederation of Indian Industry (CII). The minister also said that development of renewable energy along with storage capacity will help reduce import of fossil fuels
NEW DELHI: Using locally-manufactured solar equipment will raise the per-unit price of power by only 2-5 paise, which will not deter buyers, power and renewable energy minister RK Singh said on Thursday.
Singh was speaking at a video conference organised by the Confederation of Indian Industry (CII). The minister also said that development of renewable energy along with storage capacity will help reduce import of fossil fuels.
The government is keen that project developers set up storage facilities and use indigenous-developed equipment.
Singh said that customers would proudly pay a little more for electricity generated from locally-sourced equipment. “We are ready to pay more for power made in India,” he said. “Whatever the difference is, around 2 to 5 paise, Indians would be happy to pay that.”
The minister’s remarks followed Renew Power’s announcement during the same conference that it plans to open a 2,000 MW manufacturing unit in the country. ET was the first to report Renew Power’s planned investment of about Rs 2,000 crore for this project. The proposed manufacturing unit is likely to create 2,000 jobs, Renew said.
The government has taken firm steps to promote local manufacturing in the renewable energy sector–where Chinese products have been dominating—following border tension with the neighbouring country. The government plans to levy a basic custom duty (BCD) of 15-20% on solar imports from China that will double in a year. Singh said the duty has been imposed to protect national interests. About 80% of India’s solar cells and modules are imported from China.
“Earlier, foreign companies were dumping their solar panels and other equipment here. We had to impose a safeguard duty to discourage that,” he said.
On renewable energy players’ concerns regarding projects signed before the announcement of the BCD, the minister said agreements signed before the BCD imposition date of August 1 would be exempted. He said he would be meeting finance minister Nirmala Sitharaman on Friday to approve the same.
However, in the event that the revenue department does not approve such an exemption, Singh said he would push the idea of a “grandfather clause” which would allow renewable energy firms to claim reimbursements on the duty they have paid while importing equipment from China. However, these will also only apply to power purchase agreements (PPAs) signed before August 1.
Adding a “grandfather clause” to existing PPAs is an understanding between solar developers and the government that the project costs more than the allocated budget at the time of closing of the deal, and hence, compensation will be provided to the developers via the distribution companies.
Singh admitted that the power sector faces challenges. “We know that the sanctity of project times and payment structures have not been maintained, and will solve them,” he said.