Energetica India Magazine nº88 March-April 2020

The trade duty has shuffled the market shares of exporting countries but has failed to significantly improve the com - petitiveness of Indian manufactured so- lar cells. Instead, it has severely slowed down capacity installs as developers wait until the high trade duty period ex - pires before importing the solar modules they need. Alternative Strategies for Supporting Domestic Solar Manufacturing In IEEFA’s view, India’s solar manufac- turing industry needs policy support but not at the cost of India’s energy tran- sition. Instead of trying to make Indian manufactured solar cells competitive by causing imported modules to be as ex - pensive as domestic ones, the industry would be better served if it was provided with an assured offtake in domestic mar- kets, and also incentivised for exporting. A good example of how local manufac - turing could be supported is illustrated in the recently concluded auction by Solar Energy Corporation of India (SECI) linking solar manufacturing to solar ca- pacity. SECI auctioned 12GW of solar capac- ity with 3GW of solar modules linked to manufacturing capacity. Developers were allowed to bid for solar capacity and module manufacturing capacity in a 4:1 ratio. Adani Green and Azure Power, two of India’s top renewable developers were awarded the project, winning 8GW and 4GW respectively at Rs2.92/kWh for 25 years with zero indexation — an acceptable price for developers which would potentially allow them to use do- mestically manufactured modules. Un- der this project, Adani and Azure have to commission solar module manufacturing capacity of 2GW and 1GW respectively. Azure Power’s analyst presentation from January 2020 suggests the company plans to commission1GW of manufac- turing capacity by FY2021 and 4GW of solar capacity betweenFY2022 and 2025, with 1GW of commissioning each year. Extension of Trade Duty Hazardous Indian solar equipment manufacturers have reportedly urged the government to extend the two-year trade duty on im - ported solar cells and modules past the July 2020 termination date. IEEFA rec- ommends the government refrain from ‘giving in’ to an easier but counterpro- ductiveoption of supporting local solar cell manufacturing. China is a global leader in solar equip- ment and its industry is years ahead in the learning curve of solar cell manufac- turing. In IEEFA’s view, China’s cheaper solar modules are a gift to India’s ener- gy transition. India mustfind innovative ways to support its solar manufacturing industry without straying from its renew- able energy capacity targets. Source: India’s Renewable Energy Policy Head - winds, February 2020; Institute for Energy Economics and Financial Analysis, 34 energetica INDIA- March-April_2020 SOLAR POWER