As many as 11 companies, including Reliance, ReNew, Indosol, First Solar, Tata Power Solar and Avaada have bagged solar photovoltaic (PV) manufacturing projects of a total 39,600 MW capacity under the second tranche of the production-linked incentive (PLI) scheme for the solar sector, the Union power ministry said on Tuesday.
The tranche II, which entails a budget outlay of Rs 14,007 crore, is estimated to generate investments worth Rs 93,401 crore and over 100,000 jobs, 35% of which would be direct employment, the ministry said.
Manufacturing capacity totalling 7,400 MW is expected to become operational by October 2024, 16,800 MW capacity by April 2025 and the balance 15,400 MW capacity by April 2026.
The good response to the tenders is expected to give a fillip to India’s efforts to build a globally competitive domestic manufacturing base for solar PV cells and modules. It would cut import dependence for these products in a big way. India has set an ambitious plan to have a solar capacity of 280 gigawatt (GW) by 2030. The PLI scheme is also in keeping with India’s commitment to reduce carbon intensity of the economy.
Power minister RK Singh said: “The PLI scheme has proved to be a watershed event in India’s renewable landscape, resulting in around 48 GW domestic module manufacturing capacity within the next three years. The scheme has boosted the government’s efforts to reduce not only the impact of global supply chain shocks but also our import dependence adhering to the Prime Minister’s vision of an Aatmanirbhar Bharat.”
A total integrated capacity of 8,737 MW was allocated under tranche I of the scheme in November-December 2022.
Considering the two tranches together, the total domestic solar PV module manufacturing capacity allocated under the PLI scheme is 48,337 MW, with cumulative support of more than Rs 18,500 crore by the government.
Under the polysilicon, ingot-wafers, solar cells and module (P+W+C+M) basket, Reliance and Indosol bagged 6,000 MW capacity each while Tempe, Arizona-based First Solar bagged 3,400MW. P+W+C+M Basket includes manufacturing of polysilicon, ingot-wafers, solar cells and modules.
Under ingot-wafers, solar cells and modules (W+C+M) Basket, Waaree bagged 6,000 MW followed by ReNew at 4,800 MW. Avaada Group, backed by Thailand’s oil and gas major PTT Pcl, bagged 3,000MW project, GRW Solar won a 2000 MW contract and JSW a 1,000 MW one.
Under the solar cells and modules basket, Tata Power Solar bagged 4,000 MW followed by Vikram at 2,400 MW and AMPIN 1000 MW.
When the solar PLI scheme was announced, the government had said it would help create 65,000 MW per annum manufacturing capacity of fully and partially integrated solar PV modules. The reduction in import substitution from the incentive scheme for domestic manufacturing was estimated to be Rs 1.37 trillion.
An earlier PLI scheme for the sector with Rs 4,500-crore outlay had received good response. The first tender led to the creation of a wait list of bidders. However, after the allocation was raised to Rs 19,500 crore, the power ministry decided to do away with the wait list and invite a fresh tender.
While the government’s stated policy is to promote solar projects and domestic manufacturing of solar equipment, many developers complain that the high basic customs duty (import tariff) on equipment – the duty on panels, for example, is 40%, inflating the cost of projects. Till the domestic capacities are created, import tariff must be kept low, they contend. A host of projects which were won by developers by quoting very low tariffs to consumers are facing viability issues.
Several companies also urged the minister to make available the PLI scheme’s benefits to firms intending to set up smaller capacities too. A section of the industry had argued that the PLI scheme would be more beneficial to the sector if companies win projects for integrated units. These players felt that it was unlikely that firms would be interested in the creation of stand-alone units for polysilicon and wafers.