ALMM, BCD Update- Developers Hope For Relief Soon

Highlights :

  • A policy shift on both ALMM and on the massive 50 GW project pipeline is needed as projects get stuck.
  • One has to believe that the MNRE will look at most for a 9 month horizon to give exemptions, post which it hopes domestic capacity catches up with demand.
ALMM, BCD Update- Developers Hope For Relief Soon MNRE Notification

Informed sources indicate that there are strong chances of the government considering developer pleas for extending applicability of ALMM conditions for domestic projects. A meeting was held between industry representatives and Minister of Power, New and Renewable Energy R K Singh on September 6. The agenda was a review meeting with key developers and other stakeholders on the pressing issues of Approved List of Models and Manufacturers (ALMM), Basic Customs Duty (BCD) and module availability.

The headline takeaway was of course the possibility that the Minister has agreed to extend the ALMM implementation on C&I and open access by at least six months (and up to a year).

The Minister has also apparently agreed to bring utility scale projects under the exemption and exempt ALMM on them too (timeline not specified).

The Minister has directed MNRE to immediately include foreign manufacturers who have already applied for ALMM following due visits and inspections and expand the ambit of ALMM. Readers will recall that the ALMM list has been used virtually as a non-tariff barrier until now by keeping foreign manufacturers out of it.

The meeting was necessitated possibly in the face of a serious slowdown that has taken hold as far as fresh solar installations go. While final numbers have not been calculated, anything between 18 GW to 25 GW of projects in the pipeline, depending on who you speak to, are in trouble due to delays and cost escalations caused by BCD as well as GST increase etc.

The move comes even as it has become obvious on the ground that exiting domestic capacity can no longer service the enhanced solar capacity targets for the country. While fresh capacity is expected to add up to over 20 GW by end of 2023 possibly, and even 40-50 GW by 2025, in the interim, measures are needed to keep projects in the pipeline going. Whether that time period is six months or one year, is the key question.

Developers predictably have accused manufacturers of taking the shelter of the 40% duty on modules to hike prices, while manufacturers have pointed to overall hike in their input costs to justify the increases. The bottomline is that existing prices in India are well over 38c per watt, from a level of 26-28c per watt till a year ago. This has impacted margins for all players who had won bids, and most of the larger ones for instance, have found various ways to protect viability.

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