The Indian government’s plan to aggressively expand large-scale solar power capacity addition through state-owned companies has started taking shape.
NTPC Limited has issued three tenders to set up a total solar photovoltaic power capacity of 750 MW. This capacity will be developed in batches of 250 MW each in three separate states. Each batch of 250 MW would in turn be developed as 5 projects of 50 MW capacity each.
As per the requirements of the tenders, all companies selected to develop projects following the completion of the bidding process will have to use solar PV modules manufactured in India. This requirement is similar to the Domestic Content Requirement (DCR) first seen in the auctions conducted by the central government under the National Solar Mission.
As per the domestic content requirement, project developers need to procure modules fully manufactured in India. Solar PV wafers and starting substrates can be imported, however, all modules (crystalline or thin-film) need to be assembled in India only.
Some media agencies have misinterpreted this requirement and have reported that foreign companies would not be allowed to participate in the bidding process. In fact, any company from any country can participate (except those banned by NTPC due to prior irregularities), however, just as Indian companies cannot procure imported modules, nor can international companies.
The tariff bids for these projects could be comparatively higher than projects that are not obligated to use India-made modules.
Imported modules are usually packaged with a very low-cost debt financing deal from development banks. Thus the cost of generation of DCR-bound projects will be slightly highly.
The NTPC tenders probably represent the largest solar PV capacity put on auction that will be set up using only Indian-made modules. An auction under the National Solar Mission allocated 375 MW DCR capacity last year.
NTPC Limited, being a state-owned company, can auction the entire capacity through Indian-made modules and would still be compliant with World Trade Organisation (WTO) rules.
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