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India Plans $2.5 Billion Auction For Solar Module Manufacturing Incentives

The Indian government is soon expected to launch a fresh tender to allocate subsidies for companies to set up solar cells and modules.

According to media reports, the Ministry of New and Renewable Energy is expected to call for bids from companies interested in expanding existing or setting up new module manufacturing facilities. The government will offer Rs 195 billion ($2.5 billion) as incentives to successful bidders.

“It is proposed to prescribe minimum 90% local value addition and 22% module performance for being eligible for PLI,” the official said. “In order to qualify for the bid, the applicant manufacturer will have to promise minimum integration across solar cells and modules.”

This will be the second such auction after the government successfully completed allocation of Rs 45 billion ($590 million) last year. A total of 19 companies participated in tender issued by the Indian Renewable Energy Development Agency (IREDA) in October 2021. Three companies — Shirdi Sai, Adani Enterprises, and Reliance New Energy — were allocated subsidies to set up up to 4 gigawatts of solar module manufacturing facilities. These companies are required to set up an entire value chain from polysilicon-to-module within 4-5 years.

The government will start disbursement of incentives once these companies start production. Incentives will take into account module efficiency and the amount of domestic equipment and raw material used, among other factors. In the proposed auction, however, the government is expected to set a condition for manufacturers to use at least 90% domestic equipment. The new auction would be open to all companies, including those successful in the first auction. However, they would be allowed to bid for a maximum of 10 gigawatts cumulative capacity.

According to the government, India has 8.8 gigawatts of module and 2.5 gigawatts of cell production capacity. There is no wafer or polysilicon production capacity operational in India. The Rs 195 billion ($2.5 billion) additional incentive was announced on 1 February 2022 by India’s finance minister to encourage companies to enhance domestic manufacturing capacity and reduce dependence on imports, predominantly from China.

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

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