According to reports, the Delhi-based Centre for Science and Environment says conditions placed by the US as part of its climate fast-start finance initiative is killing the Indian solar panel industry.
According to the CSE, the US Exim Bank and the Overseas Private Investment Corporation are offering low-interest loans to solar project developers in India only is they buy the equipment, the solar panels and cells from US companies. As a result most orders are being bagged by US companies rather than local manufacturers, putting the domestic solar photo-voltaic industry at risk, says CSE deputy director Chandra Bhushan.
Fast start finance is a $30 billion fund set up under the aegis of the United Nations Framework Convention on Climate Change (UNFCC). The fund, adopted at the Copenhagen climate meet in 2009, is meant to help developing nations deal with the impact of climate change and limit greenhouse gas emissions, says Bhushan.
According to him, “The US has been using the fund to promote its own solar manufacturing. The US Exim Bank and the OPIC have been offering low-interest loans to Indian solar project developers on the mandatory condition that they buy the equipment, solar panels and cells from US companies. This has distorted the market completely in favour of US companies.”
Currently, 80 per cent of local manufacturers are in a state of forced closure and debt restructuring with no orders coming to them, while the US manufacturers are getting orders from Indian solar power developers, according to the CSE. The Centre has been promoting solar power projects since 2010 as part the National Action Plan on Climate Change.
The Jawaharlal Nehru National Solar Mission (JNNSM), plans to install 22,000 MW of solar energy by 2022, and though it mandates a domestic content requirement, ie all projects must buy domestically-manufactured equipment, it only specifies this in the case of crystalline PV technology, not thin-film PV. CSE researchers say this has provided a loophole for the US Exim Bank and OPIC to offer low rates of interest (about 3%) and a long repayment schedule (of up to 18 years) to Indian solar project developers provided they buy thin-film panels manufactured by US companies.
Loans from Indian banks come with an interest rate of close to 14% or more. This has skewed the market completely in favour of thin-film panels imported from the US, despite the fact that these are less efficient than crystalline panels. Almost 60% of panels installed in India are thin-film, while globally its only 14%.