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Published on February 8th, 2011 | by Mridul Chadha


US Wants India to Relax Trade Restrictions in its Solar Energy Sector

February 8th, 2011 by  

US Commerce Secretary Gary Locke has expressed ‘great concern’ regarding India’s solar energy policies which restrict the amount of imported solar panels and other equipment.

India launched the National Solar Mission which aims to install 20,000 MW of power generation capacity by 2022. This would be achieved in three phases. During the first phase (till 2013), 1000 MW would be installed. This will include 500 MW of solar PV projects and 500 MW of solar thermal project. In addition, 100 MW of distributed solar power generation capacity will also be installed.

The government has unveiled attractive tariffs for purchase of power from these power plants. These tariffs are about 7 to 8 times more than those offered to conventional power plants.

However, there are certain regulations which the project developers need to follow in order to qualify to earn these attractive tariffs. The project developers need to use only those solar panels, parabolic reflectors and other equipment which are manufactured/assembled in India. Projects using imported equipment would not be eligible for the premium tariffs.

The government has adopted this policy initiative to promote growth of domestic solar equipment manufacturing. India’s production of solar panel-grade silicon is minimal and almost all the manufacturers import the raw silicon (in case of crystalline panels) and specially-coated raw glass panels (in case of thin film panels).

Speaking to the Wall Street Journal, Locke said that the Indian government goal to promote domestic growth by restricting import is not the best practice for the sector and suggested the government should consider other ways of promoting the domestic manufacturing sector. He also said that the American companies offer some of the most advanced and efficient solar energy technologies and India must not adopt obsolete technologies.

Although India’s intention to promote a domestic manufacturing sector is a wise one, its approach is not the best one. Banning the import of solar power equipment during the first phase of the National Solar Mission could hamper efforts to achieve the 1000 MW target since the domestic manufacturers might not be able to fulfill the sudden demand.

The United States and India are collaborating in an ambitious space-based solar energy initiative. Called the Kalam-NSS Initiative, the program’s aimed at making space-based solar energy a commercially viable business venture by 2025. Hopefully the two governments can come up with a similar program for enhanced collaboration on technology transfer for the conventional solar power generation technologies.

Image: Amaresh S K (Flickr)/ CC

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About the Author

currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.

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