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India Forced To Cancel Solar Tender Due To WTO Ruling

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Non-compliance with a September 2016 ruling of the World Trade Organization that barred India from mandating use of Indian-made solar modules and cells now forced the Indian government to cancel a 250 megawatt tender awarded last year.

Azure Power was awarded perhaps the single largest project under the Domestic Content Requirement (DCR) program in October 2017. The project, with capacity of 250 megawatts (AC), was supposed to have only Indian-made solar panels. Azure Power was supposed to sign a power purchase agreement with NTPC Limited. 

NTPC Limited is India’s largest power generation company with an installed capacity of more than 50 gigawatts. It is also owned by the Indian government, a fact officials thought would allow them to circumvent the WTO ruling.

The WTO allows use of domestic equipment if the project is linked directly to the government or a government-owned entity and no commercial gain is to be made. NTPC, however, would have signed back-to-back power purchase agreements with NDMC, a government-owned power utility in India’s capital Delhi. However, NDMC does not have enough power demand to consume the entire 250 MW capacity and would have ended up selling it further.

Since NTPC, and NDMC, would have made commercial gains from the sale of solar power from the project, it violated the WTO rules, and the tender had to be cancelled.

The capacity is likely to be re-tendered in the coming weeks and prospective developers would now be free to use either Indian-made or imported solar modules. 

Azure had secured the 250 megawatt project at a highly competitive rate of Rs 3.14/kWh (¢4.9/kWh), the lowest for any DCR project and competitive with tariffs of projects using significantly cheaper imported solar modules.

The DCR program is as old as the National Solar Mission itself which was launched in late 2010. The program was aimed at providing ample market opportunity to Indian solar module manufacturers which have suffered significantly at the hands of Chinese and Malaysian module manufacturers over the years. According to the Indian Solar Manufacturers Association, India now imports 90% of solar power modules installed at its power plants.

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An avid follower of latest developments in the Indian renewable energy sector.

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