MNRE Minister confirms fresh bids to be called for expanded Solar PLI Scheme

Highlights :

  • Minister’s remark has created much confusion in the industry as 13 companies had already applied for PLI incentives and some have even begun construction work.
  • The scheme to enhance indigenous solar cells and panels’ manufacturing was enhanced by Rs 19,500 crore in the last Budget presented.
MNRE Minister confirms fresh bids to be called for expanded Solar PLI Scheme

Union minister for Power and Renewable Energy RK Singh has said that the fresh bids will be invited for the setting up of 40,000 MW production capacity for solar modules and cells under the production-linked incentive (PLI) scheme. Finance Minister Nirmala Sitharaman had made an additional outlay of Rs 19,500 crore for the PLI scheme – up from Rs 4,500 crore previously – in the Union Budget about two weeks ago.

The statement RK Singh has caused much head turns in the industry as 13 companies have already applied for the incentives and are on the waiting list – Coal India, Adani Infrastructure, Larsen and Toubro, ReNew Solar, Tata Power Solar, Waaree Energies, Vikram Solar, Megha Engineering & Infrastructure and FS India Solar Ventures, Avaada Ventures, Premier Energies and Acme Eco Clean Energy. Some of them have even started construction activities. Manufacturing being a far more long term commitment, many had made plans to continue irrespective of the outcome of the first PLI scheme in any case.

But the decision to call for fresh bids makes sense in a way, since the quantum of the scheme is vastly larger now, and firms might need to scale up their ambitions proportionately, as compared to the previous bids, including even the winning firms.

Earlier the government tender had affirmed that the ‘bucket list’ applicants would be eligible for PLI incentives. Their eligibility to avail incentives was to be from the date of commencement of manufacturing of solar panels and solar cells for five years.

Now the industry has termed RK Singh’s ‘fresh tenders’ remark as illegal and they may even consider moving to courts.

The government had selected Reliance New Energy Solar, Shirdi Sai Electricals and Jindal India Solar Energy as the beneficiaries of the PLI scheme for panel manufacturing when the first allocation of Rs 4,500 crore was made.

The irony in the entire episode is that many of these companies have acquired land. Some companies have completed land development work. They were expecting letters of award from IREDA which is the implementing agency for the scheme.

Announcement of imposition of basic customs duty (BCD) of 40% on solar panels and 25% on solar cells that will come into effect from April 1 itself has increased confusion in the solar sector. Players opine that the upcoming tariffs are expected to increase the cost of solar power to domestic consumers. Manufacturers operating out of SEZ zones are already lamenting the impact of the duty on cells for their ‘export’ competitiveness.

Tata Power had applied for 8GW manufacturing capacity, a plan it has also confirmed subsequently in analyst meets. The company looks to produce cell and module; 4GW capacity for each. Other players like Coal India, L&T, Adani, ReNew Power and Waaree Energies have asked for 4 GW production capacity each. Many of these firms have committed to their plans irrespective of whether they make the cut in the PLI scheme or not.

At the moment, it does appear that the PLI scheme might try to favour firms willing to invest in the whole chain from sand to modules, as the first tranche did. However, the sheer size of the scheme now means that firms like Coal India, that has a wafer to modules plan, or even some cells+modules aspirants will stand a chance to make the cut possibly.  Or perhaps the government will finally be able to do a little for the vast MSME sector involved in module making? Whatever the final shape, noone doubts that the most important thing is to actually get moving with the completion of the process and award of formal letters  as soon as possible.

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