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Mahesh

10/04/24 18:56 PM IST

The ‘import restrictions’ on solar PV cells

In News
  • Recent government orders on attempts to increase local sourcing of solar modules to support India’s renewables manufacturing ecosystem has been widely reported in the media as ‘import restrictions’.
ALMM list
  • This list consists of manufacturers who “are eligible for use in Government Projects/Government assisted projects/ projects under Government schemes & programmes.... including projects set up for sale of electricity to the Central and State Governments.”
  • However, this notification was “kept in abeyance” two years after it was issued, for the past financial year.
  • While the government did not give an explicit reason for this, it has been reported that it stems from concerns and demands of renewable power producers who had secured sale contracts with the government before these rules were issued, when solar modules and cells were overwhelmingly imported from China at highly competitive rates.
  • India’s domestic renewables sector, at the time, was unlikely to meet the spike in demand for solar power production equipment at rates offered by Chinese manufacturers.
  • The government’s re-introduction of this rule has been premised on the estimation that following measures, such as the Production Linked Incentive (PLI) scheme, India’s domestic sector has boosted its production capacities and bettered price competitiveness to meet local demand.
  • This is an import substitution effort, and not an attempt to restrict imports.
Manufacturing capacity
  • Until January of 2023-24, data from the Ministry of Commerce’s Import-Export showed that China accounted for 53% of India’s solar cell imports, and 63% of solar PV modules.
  • Ratings agency ICRA estimates that China commands more than 80% share of the manufacturing capacity across polysilicon, wafer, cell and modules.
  • In comparison, the manufacturing capacity in India is relatively low and is largely restricted to the last manufacturing stage,” ICRA stated in its November 2023 report, adding that the PLI scheme is expected to change this, with integrated module units expected to come up in India over the next 2-3 years.
China leading exporter
  • In a July 2022 report, the International Energy Agency (IEA) noted that China was the most cost-competitive location to manufacture all components of the solar PV supply chains.
  • This is mainly because of the lower cost of power supplied to the industry, the agency observed, as electricity accounts for more than 40% of production costs for polysilicon and almost 20% for ingots and wafers.
  • The IEA also observed that ‘Chinese government policies prioritised solar PV as a strategic sector, and growing domestic demand enabled economies of scale and supported continuous innovation throughout the supply chain.’”
Scope of solar in India
  • The government’s ambitious target of 500 GW of installed capacity from non-fossil fuels by 2030 is the main driver to scale solar power in India.
  • India also accounts for the fastest rate of growth for demand of electricity through 2026 among major economies, according to the IEA.
  • This is because of strong economic activity and expanding consumption of products to mitigate extreme weather. Solar power accounted for about one-third of all energy generated from renewables between April last year and February this year.
  • The country has an estimated solar power potential of 748.99 GW.
  • Hence, the potential of solar energy is not fully tapped, so far. The government is making efforts to harness the available potential through various schemes & programs.
Source- The Hindu

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