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Local sourcing mandatory for solar mission projects in India

According to reports,  in what may provide a major relief to domestic solar photovoltaic (PV) equipment manufacturers threatened by cheaper Chinese imports, the government has made it mandatory for developers to use locally-sourced cells for the implementation of solar projects proposed to be auctioned under the second round of the flagship Jawaharlal Nehru National Solar Mission (JNNSM) programme, sources said.

Cells account for about 70% of the cost of solar PV projects. The government is expected to allocate solar PV projects worth 320 mw in the next round of bidding under the first phase of the JNNSM. India has envisaged adding 20,000 mw solar generation capacity by 2022 under the programme. Of this, 700 mw capacity was auctioned for implementation under the first round of bidding.

The installed manufacturing capacity for solar PV equipment in the country is expected to go up from 600-700 mw to 1,100-1,200 mw in a year’s time, enough to manage the local demand.

The government’s move is expected to benefit domestic PV manufacturers such as Moser Baer, Tata BP and Jupiter. These companies were facing stiff competition from Chinese companies. The Chinese vendors are offering solar equipment at a price 25-30% lower compared to the equipment supplied by local manufacturers.

Under the changed regulations, however, developers using thin film technology can import their equipment since domestic manufacturing facility is still not in place.

The government is expected to announce revised guidelines some time next week. Sources said the ministries concerned — power and renewable energy — gave their informal approval for changes in the existing guidelines on August 8. A formal approval from them may come any time.

Under the revised guidelines, the maximum capacity of PV power projects has been increased from 5 mw to 20 mw, time limit for achieving financial closure has been increased from six months to seven months and commissioning time from 12 months to 13 months.

Besides this, flexibility has been granted for part-commissioning of the auctioned capacity in multiples of 5 mw though the developer will have to comply with the final time limit. For example, the developer of a 20 mw project can commission its capacity in four installments of 5 mw. The government aims to complete the signing of power purchase agreements by January.

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