1. Solar power: Even as PM Narendra Modi hard-sells make in India scheme, Gujarat PSU plays spoiler

Solar power: Even as PM Narendra Modi hard-sells make in India scheme, Gujarat PSU plays spoiler

Even as the Modi government is hard-selling its “Make in India” mission, a PSU from the prime minister's home state has put a spoke in the wheels of domestic manufacturers of solar power modules.

By: | Published: May 3, 2017 7:36 AM
Modi government, Solar Power, Make in India, PSU, Gujarat Industries Power Company, GIPCL, equipment manufacturers Even as the Modi government is hard-selling its “Make in India” mission, a PSU from the prime minister’s home state has put a spoke in the wheels of domestic manufacturers of solar power modules. (Source: Reuters)

Even as the Modi government is hard-selling its “Make in India” mission, a PSU from the prime minister’s home state has put a spoke in the wheels of domestic manufacturers of solar power modules. Inviting tenders for the development of an 80 mega watt (MW) plant at the Charanka solar park in Gujarat’s Patan district, Gujarat Industries Power Company (GIPCL) has added a rider: The bidders must supply modules that have a 25-year insurance cover.

And none of the domestic or foreign insurance players has so far agreed to give such a wide cover to the domestic solar developers. According to industry sources, GIPCL’s policy, if enforced and emulated by other utilities, would pave the way for Chinese module makers to entrench their already strong presence in the Indian market, leaving the domestic firms high and dry. With a substantial capacity base of more than 75 GW and a conducive rating system, it is relatively easier for Chinese firms to get the 25-year insurance cover.

Since the solar manufacturing industry is still struggling to grow in India, an insurance framework exclusively for domestic modules has not been formulated yet. Sasi Kumar Adidamu, chief technical officer at Bajaj Allianz, said even globally, there are very few insurance/reinsurance players who offer such a cover and have the required expertise to evaluate the risks specific to the solar modules. Even those firms who could provide such long-term cover to the solar industry would prefer to restrict the facility to established manufacturers with strong R&D foundations and track records, he added.

Tata Power Solar and Vikram Solar are the only two Indian solar equipment makers that are listed by Bloomberg BNEF as Tier-I PV module manufactures and could have met the GIPCL’s tender criteria. The state government-owned power utility has already named one Canadian and five Chinese companies as “acceptable vendors”. Industry sources told FE that insurance is usually not a must for solar modules.

Instead, the equipment manufacturers provide a warranty on their products, stating that the generation capacity of the products would not go below 90% of the initial level in 10 years and 80% in 25 years. Indian solar modules usually carry product warranties for 25-27 years.

“The policy shall be on the name of the owner (GIPCL). The premium, charges, recurring charges, any expenditure for the insurance policy shall be in the scope of bidder,” the GIPCL tender document said. Even after being told about such insurance schemes being not available in the country, the company was insisting on the insurance requirement, which has no precedent in India, according to source privy to the development. The person added that Indian module manufacturers had approached some domestic insurance companies and even a clutch of global players for the 25-year cover but to no avail.

GIPCL had won the bids for the 80 MW solar projects and signed power purchase agreements (PPAs) last year with the Solar Energy Corporation of India (SECI). According to analyst firm Mercom, the PPAs were signed at a fixed tariff of Rs 4.43/kWh. The projects are a part of the 590 MW Charanka solar park, spread across 5,384 acres.
Domestic solar module manufacturers have been facing tough times, especially after the World Trade Organization (WTO) ruling last year that went against India for favouring local manufacturers in its solar power programme.

Joy Saxena, executive director-finance at Vikram Solar, told FE the recent exemption of customs duty for equipment required for solar rooftop installations was also a dampener for the domestic players. The tax waiver would make imported modules, which are anyway 8-10% cheaper than its domestic counterparts, more attractive for developers. Solar panels worth $42 billion are expected to be imported by 2022. The situation could become more difficult for local manufacturers with government tenders shutting doors on them.

  1. J
    Jayesh Mahajan
    May 7, 2017 at 11:59 pm
    Modiji needs to support indiginous producers or they will go sick
    Reply
    1. B
      Bipin patel
      May 3, 2017 at 5:25 pm
      Sir I'm interested solar pawor plant may 10 aecers village farms​ sabarkantha
      Reply
      1. S
        Sunil
        May 3, 2017 at 11:50 am
        I want to setup solar plant starting from 12000 sfit
        Reply
        1. Abi raman.K
          May 3, 2017 at 3:07 pm
          Sir Please Call To My Number I will Explain You Please 7598434476
          Reply
        2. M
          m
          May 3, 2017 at 10:25 am
          Does this mean the government is stopping oil imports and starting solar import. Who will benefit?
          Reply
          1. A
            Anupam Chatterjee
            May 3, 2017 at 9:51 pm
            No known plan to import solar power. The story is about the equipment used to build solar parks.
            Reply
            1. L
              Lovely
              May 4, 2017 at 12:52 am
              : m.huffingtonpost /markandey-katju/indian-media-largely-works-against-the-people-not-for-them/

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