Government To Bring Down Solar Tender Linked To Manufacturing

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It is expected that the government is going to scale down the manufacturing component in manufacturing-linked solar tender to around 3 gigawatts. This decision was taken to avoid the high tariffs of the solar projects and ensure that the pilot is successful.

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Solar Energy Corporation of India (SECI) had earlier this year passed 5 GW manufacturing tender with 10 GW power purchase agreement (PPA) in a hope to grow the solar manufacturing capacity of India. But according to the sources, it is feared that solar developers would increase the PPA tariff to compensate for the margins lost in manufacturing as the cost of manufacturing is higher in India in comparison to cheaper imports from China.

“As of now, a final decision has not been taken, but we want to ensure that the tariffs resulting from this tender should not ultimately become unviable for discoms. We will soon take a final call on whether to come to an intermediate capacity or go ahead with what has already been proposed”, said an official to ET.

Some of the developers had proposed that the required manufacturing capacity should be one-fourth of the size of PPA. The government is not offering any subsidy for manufacturing in the tender but developers are getting an indirect subsidy in the form of a higher tariff cap at RS 2.93 per unit.

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The government is also planning to pass large scale manufacturing-linked tenders of the size as high as 20 GW. But it will depend on the first tender fares. As around 90 per cent of solar equipment used in India is imported and 85 per cent comes from China, 25 per cent safeguard duty has been imposed on solar panels imported from China and Malaysia. This manufacturing-linked tenders are expected to reduce this import dependence and a create solar equipment manufacturing base in India.

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