The government has approved basic customs duty (BCD) for cells and modules as well as an enhanced budget of INR 240 billion (USD 3.2 billion) for production-linked incentive (PLI) for domestic manufacturers. As per the budget announcement made this week, 25% and 40% BCD would be levied on cells and modules respectively from 1 April 2022 onwards. Both measures were widely expected and finally clear way for a dramatic transformation of the solar sector in India.
We expect total module manufacturing capacity to touch 55,000 MW by 2025;
BCD would add to overall cost pressures in the sector and reduce cost advantage of solar power;
The challenge for the government would be to wean manufacturers away from trade barriers and subsidies over time;
Enhanced PLI budget means that all 15 remaining bidders in the scheme with total bid capacity of 48,600 MW can now be accommodated in the scheme. The move is being hailed across the industry but we question the need for financial incentives when manufacturers have significant protection from imports through BCD and ALMM. The incentive is a waste of taxpayer money. Moreover, it risks distorting the market by creating massive capacity glut. We estimate total installed capacity of polysilicon, cells and modules to touch 30,000 MW, 40,000 MW and 55,000 MW respectively by 2025, far in excess of domestic demand. Some smaller bidders may, however, struggle to raise required funds within the tight deadlines – only 1.5 years for cells-modules. Based on an analysis of the investment requirement vs PLI bids, Adani, First Solar, ReNew, Waaree, Tata Power and Vikram would be the biggest beneficiaries.
Figure: PLI bid capacities and amounts
Source: IREDA’s list of qualified bidders
India’s renewable sector, having so far focused on adding more generation capacity with ever lower tariffs, is set for a drastic change with pivot towards manufacturing. Total manufacturing investment over next three years is expected to touch INR 600 billion (USD 8 billion). Despite oversupply and financial incentives, prices for domestically produced modules are expected to remain higher than for Chinese module prices by up to 10%. It also seems fair to assume that fall in Indian module prices and tariffs would be much more gradual going forward. The challenge for the government would be to wean manufacturers away from trade barriers/ subsidies and ensure that they remain competitive with leading international manufacturers on technology and cost.
Impact on project developers and consumers The government has refrained from providing any BCD exemption for under construction projects, which will now see capital costs going up by a further 16%. Change in law compensation would ultimately cover utility scale project developers for the additional cost. But there is no clear compensation formula specified in most state tenders resulting in a significant hit because of: i) additional working capital requirement arising from delay of up to 2 years in claim approval from regulators; and ii) inadequate carrying cost allowed in determination of incremental tariff. We estimate total project pipeline impacted by BCD at 38,575 MW with Adani and Azure accounting for the biggest share because of their combined 12,000 MW win in the manufacturing-linked tender.
Figure: Estimated project pipeline affected by BCD imposition, MW
Source: BRIDGE TO INDIA research
BCD would have far more negative impact on the corporate renewable market, where effective cost for consumers would increase by about INR 0.50/ kWh eating into shrinking cost advantage of open access solar.
Other budget announcements The government has also extended operations commencement deadline for new manufacturing companies to avail concessional corporate tax of 15% by a year to March 2024. Beyond the pro-manufacturing announcements, there was little of note in the budget for the sector. Storage has been included within definition of ‘infrastructure’ sector, which may mean marginally better access to financing. The government also announced a plan to issue sovereign green bonds and extended BCD exemption on electrolysers to FY 2024.
This report provides a quarterly update on key trends and developments in the corporate renewable market including capacity addition, key players, pol...
This report provides a detailed update of all key sector developments and trends in the quarter – capacity addition, leading players, tenders and po...
India’s corporate renewable market is becoming more vibrant with strong demand, policy and technology levers. Driven by net zero targets and investo...
Green hydrogen is a versatile fuel which may be used as an energy store, fuel and feedstock across multiple sectors. Refining and fertiliser industrie...
A business case for renewable energy certificates for Indian companies to meet RE 100 targets
C&I consumers account for 53% of power consumption but only 6% of this requirement is met from direct procurement of renewable power. In face of m
Price :
Apply now
Register
Arrange Trial Session
Developing a corporate renewable procurement roadmap
Register Now
Advanced clean energy technologies
Register Now
We use cookies to offer you an optimal user experience and collect information on website usage.
Login
Or
Sign up
Sign up to our free monthly bulletin, blogs and reports
Terms and conditions
Introduction
These terms and conditions govern your use of our website – bridgetoindia.com. By using our website, you accept these terms and conditions in full; if you disagree with any part of these terms and conditions, you must not use our website.
You must be at least 18 years of age to use our website; by using our website, you warrant and represent to us that you are at least 18 years of age.
Our details
This website is owned and operated by BRIDGE TO INDIA Energy Private Limited.
We are registered in India under registration number CIN: U40106 HR2008 PTC058267, and our registered office is at C8/5 DLF 1, Gurugram 122001, INDIA.
Our principal place of business is at C8/5 DLF 1, Gurugram 122001, INDIA.
Our GST number is 06AADCB 6783 D1ZQ.
You can contact us by post at the address given above or by telephone on +91-124-420-4003 or by email at contact@bridgetoindia.com
Ownership and licence to use
All information and content on our website is owned exclusively by us. We reserve the right to discontinue or alter any or all of the website content at any time.
The website contents are protected by Indian copyright and international copyright/intellectual property laws under applicable treaties and/or conventions.
We grant you a personal, non-exclusive, non-transferable licence to use the website.
We reserve the right to restrict access to our website at our discretion; you must not circumvent or bypass, or attempt to circumvent or bypass, any such access restriction measures.
Acceptable use
You must not edit or modify any material on our website.
You must not:
sell, rent or sub-license material from our website;
share, reproduce or copy any material from our website without our express written consent.
You must not:
use our website in any way or take any action that causes, or may cause, damage to the website or impairment of the performance, availability or accessibility of the website;
use our website in any way that is unlawful, illegal, fraudulent or harmful;
conduct any systematic or automated data collection activities (including without limitation scraping, data mining, data extraction and data harvesting) on or in relation to our website;
use data collected from our website for any direct marketing activity (including without limitation email marketing, SMS marketing, telemarketing and direct mailing).
Limited warranties
We do not warrant or represent completeness or accuracy of the information published on our website. The information available on our website is of general use and may not be suitable for you.
We aim to provide accurate and up-to-date information but are not legally liable for the accuracy of such information.
You use our website at your own risk.
To the maximum extent permitted by applicable law, we exclude all representations and warranties relating to the subject matter of these terms and conditions, our website and the use of our website.
Registration and accounts
You may register for an account with our website by completing and submitting the account registration form on our website.
You must keep your password confidential.
You must not use any other person's account to access the website.
You must not allow any other person to use your account to access the website.
You must notify us in writing immediately if you become aware of any unauthorised use of your account.
We may suspend or cancel your account at any time in our sole discretion without notice or explanation.
Purchases
All purchases made on this website are non-refundable and non-exchangeable.
Your content
In these terms and conditions, "your content" means all information and materials (including without limitation text, graphics, images, audio material, video material, audio-visual material, scripts, software and files) that you submit to us for storage or publication on, processing by, or transmission via, our website.
You grant to us a worldwide, irrevocable, non-exclusive, royalty-free licence to reproduce, store and, with your specific consent, publish your content on our website.
You warrant and represent that your content will comply with these terms and conditions. Your content must not be illegal or unlawful, must not infringe any person's legal rights, and must not be capable of giving rise to legal action against any person (in each case in any jurisdiction and under any applicable law).
Your content, and the use of your content by us in accordance with these terms and conditions, must not:
infringe any copyright, trade mark or other intellectual property right;
be in breach of any contractual obligation owed to any person;
be untrue, false, inaccurate or misleading;
Privacy
Information collection and use - For a better experience while using our website, we may require you to provide us with certain personally identifiable information, including but not limited to your name, phone number and email address. The information that we collect may be used to contact or identify you.
If you use our website, you agree to the collection and use of information in relation with these terms and conditions. The personal information collected by us is used for providing and improving our services. We will not use or share your information with anyone except as described here.
Log data - Whenever you visit our website, we collect information that your browser sends to us including your computer’s Internet Protocol address, pages of our website visited by you, the time and date of your visit, the time spent on those pages, and other statistics.
Cookies – these are files with small amount of data that is commonly used as anonymous unique identifier. These are sent to your browser from the website and are stored on your computer’s hard drive. Our website uses these “cookies” to collection information and to improve our website. You have the option to either accept or refuse these cookies and know when a cookie is being sent to your computer. If you choose to refuse our cookies, you may not be able to use some portions of our Service.
Service providers - We may employ third-party companies and individuals to improve or repair our website and to assist with running our business activities etc. These third parties may have access to your personal information to perform the tasks assigned by us to them. However, they are obligated not to disclose or use the information for any other purpose.
We may suspend or cancel your account at any time in our sole discretion without notice or explanation.
Security - We value your personal information and strive to protect it and keep it confidential. But as no technology or system can be 100% secure and reliable, we cannot guarantee absolute security of your personal information.
Links to other sites - Our website may contain links to other sites. These external sites are not operated by us and we have no control over, and assume no responsibility for their content, privacy policies, or any other business practices.
Children’s privacy - Our website does not serve anyone under the age of 18. We do not knowingly collect personal identifiable information from children under 18. If you are a parent or guardian and you are aware that your child has provided us with personal information, please contact us so that we can delete their information and take any other necessary actions.
Breach of these terms and conditions
Without prejudice to our other rights under these terms and conditions, if you breach these terms and conditions in any way, or if we reasonably suspect that you have breached these terms and conditions in any way, we may suspend your access to our website, prohibit you permanently from accessing our website and/or commence suitable legal action against you, whether for breach of contract or otherwise.
Where we suspend or prohibit or block your access to our website or a part of our website, you must not take any action to circumvent such suspension or prohibition or blocking (including without limitation [creating and/or using a different account).
Amendments
We may revise these terms and conditions from time to time.
The revised terms and conditions shall apply to the use of our website from the date of publication of the revised terms and conditions on the website, and you hereby waive any right you may otherwise have to be notified of, or to consent to, revisions of these terms and conditions.
Privacy
You hereby agree that we may assign, transfer, sub-contract or otherwise deal with our rights and/or obligations under these terms and conditions.
You may not without our prior written consent assign, transfer, sub-contract or otherwise deal with any of your rights and/or obligations under these terms and conditions.
If a provision of these terms and conditions is determined by any court or other competent authority to be unlawful and/or unenforceable, other provisions will continue in effect.
The exercise of your and our rights under these terms and conditions is not subject to the consent of any third party.
The terms and conditions constitute the entire agreement between you and us in relation to your use of our website and supersede all such previous agreements between you and us.
These terms and conditions shall be governed by and construed in accordance with Indian Law.
Any disputes relating to these terms and conditions shall be subject to the exclusive jurisdiction of the courts of India.