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Some solar projects may escape local content rule in India

According to reports, the Ministry for New and Renewable Energy proposes to have two categories of projects under the Jawaharlal Nehru National Solar Mission — one with mandated domestic content and the other allowing use of imported equipment.

To participate in the National Solar Mission, developers have to buy solar cells and modules from domestic manufacturers and sign power purchase agreements with power plants under the mission.

In return, they receive benefits including subsidies through guaranteed long-term power tariffs.

By having two categories, the Ministry seems to have found a way to stave off US pressure not to bring in more products under the draft guidelines that mandate use of domestic equipment.

Off-grid projects under Batch I of the second phase began from April 1, and tenders for grid-connected projects will be out next month.

While all approvals are in place to rollout grid-connected projects under the second phase, guidelines spelling out the domestic content requirement still need to be formalised.

The second phase will be in two batches as the capacity is high — 3,000 MW.

The earlier proposal bringing more items, such as thin films and solar cells, under the domestic sourcing requirement had so irked the US that it had filed a complaint with the Dispute Settlement Body of the World Trade Organisation against the mandate that crystalline solar photovoltaic modules had to be sourced locally.

Tarun Kapoor, Joint Secretary (Solar), MNRE, said the Ministry was yet to firm up how much of the 750 MW being tendered would fall under the domestic content norm.

He said WTO norms were not being violated under the Solar Mission.

One of the Mission’s main objectives is to promote domestic manufacturing in the sector, which is why certain domestic content requirements were made mandatory in various schemes under Phase I. In the second phase, the domestic sourcing content is being expanded.

At the 4th Clean Energy Ministerial, Prime Minister Manmohan Singh had said that “as we expand our reliance on solar energy, we are keen to ensure induction of the best technology and also encourage domestic production of the equipment needed.

“India is potentially a large market for production of such equipment. It is also a potentially competitive attractive production base for supplying to other countries. We, therefore, encourage global manufacturers to set up production facilities in this area.”

Following the launch of the mission in 2010, the domestic manufacturing capacity of SPV cells and modules has increased from about 200 MW to 2,000 MW. The sourcing of power generated from projects in the second phase will be done by Solar Energy Corporation, which has been formed primarily to execute the mission.

For the first phase, NTPC Vidyut Vyapar Nigam, the trading arm of NTPC, was designated as the nodal agency for sale and purchase of grid-connected solar power.

The first phase of the mission, which concludes on March 31, has 1,500 MW of installed capacity till now.

This includes States’ capacity and migrant projects. An additional 10,000 MW will be implemented by the end of 12’th Plan ending 2017.

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