Solar PLI: Fresh tenders to be invited, says power and renewable energy minister RK Singh

Union minister for power and renewable energy RK Singh on Thursday said fresh tenders would be invited for the setting up of 40,000 MW manufacturing capacity for solar modules and cells under the production-linked incentive (PLI) scheme for the sector. The Union Budget 2022-23 made an additional outlay of Rs 19,500 crore for the PLI scheme, which had an initial outlay of Rs 4,500 crore.

The ministry’s unexpected move could create uncertainty for the 13 companies that had applied for the incentives earlier and are on the wait list. These include some firms which have started the construction activities at the sites.

The government had earlier said in the tender document that the so-called ‘bucket list’ of applicants would be eligible for the incentives for five years starting from the date of commencement of production. Industry sources called the power and renewable ministry’s decision to invite fresh tenders ‘illegal’; some firms in the wait list could move courts, they added.

The 13 companies on the wait list include public-sector Coal India, Adani Infrastructure, Larsen and Toubro, ReNew Solar, Tata Power Solar, Waaree Energies, Vikram Solar, Megha Engineering & Infrastructure and FS India Solar Ventures, Avaada Ventures, Premier Energies and Acme Eco Clean Energy.

Reliance New Energy Solar, Andhra Pradesh-based transformer manufacturer Shirdi Sai Electricals, BC Jindal Group’s Jindal India Solar Energy were selected as the beneficiaries of the PLI scheme for solar panel manufacturing based on the initial allocation of Rs 4,500 crore.

According to industry officials, stakeholders were expecting IREDA, the implementing agency, to expedite and issue letters of award to the 13 companies in the bucket list. Many of these firms have already acquired land and some have even done the land development work.

The solar PLI incentives will be made available over five years.

“However, it (fresh tender) is a surprising development. This will further delay India’s plan to create self-dependence in the sector. The plan to impose basic customs duty (BCD) of 40% on solar panels and and 20% on cells from April 1 in the light of poor domestic capacity has already caused uncertainties as these tariffs could increase cost of solar power to consumers.

Another official who termed the move as illegal said it went against the terms of the first tender agreement. However, he declined to specify his plan of action and his firm would rather “wait and watch” before taking a call on how to respond to the ministry’s decision.

Tata Power that has applied for a total of 8GW capacity under the PLI scheme with 4GW each for cell and module manufacturing. It is learnt that the company’s plan is to begin with manufacturing of modules and wait for market to pan out before entering into wafer and polysilicon manufacturing. “Depending on the capacity the company will take around 12-18 months to complete the project once it is awarded,” a source had told FE earlier.

Vikram Solar had applied for 3.6 giga watt (GW) of cells and modules capacity, while others like Adani, Coal India and L&T, ReNew Power and Waaree Energies had applied for 4 GW each.

The new capacities are seen to provide a domestic supply source to te solar power industry which is dependent on imports to meet 80% of its equipment requirement. As per the recent COP26 announcements, the country has set a target to install 500 GW)of renewable energy capacity by 2030 and the bulk of this is to come from solar plants.

The current installed renewable energy capacity in the country in 103 GW, of which 48 GW are solar. Another 50 GW of renewable energy projects are under implementation and 32 GW are in various stages of bidding. To boost domestic manufacturing, the Centre had imposed a 25% safeguard duty on solar imports from China and Malaysia in July 2018 for two years, which was extended to July 2021, at a rate of 15%.