NEW DELHI: Solar project developers have requested the government to reconsider the proposed large scale, manufacturing-linked solar power tenders, saying it would compel them to foray into equipment manufacturing, which is a completely different business requiring different skillsets.
Risks involved in setting up of power projects and venturing into manufacturing of equipment are not comparable either, as the power sector is highly regulated while manufacturing business is largely market driven, Solar Power Developers Association (SPDA) has said in a letter to power minister R K Singh.
“It is being perceived that, by linking PPA (power purchase agreement) with solar equipment manufacturing, government is compelling them (independent power producers, or IPPs) to get into manufacturing — which is cause of concern for most developers,” said SPDA whose members include industry bigwigs such as ReNew Power, Avaada Power, Acme Solar, Green Infra, Azure Power, SPRNG Energy, and Hero Future Energies.
“Members of SPDA have expressed their reluctance in venturing in solar manufacturing,” it said. ET reviewed a copy of the letter sent earlier this week.
Solar Energy Corporation of India (SECI) had earlier this year floated a 5 GW manufacturing tender linked with 10 GW power purchase agreement, as part of a government plan to revive the ailing solar manufacturing industry in the country. The technical bid for the tender was supposed to open later this month, but it has been postponed to third week of August, as the developers’ have expressed their concerns in the pre-bid meeting.
Government officials, however, said the concerns of developers are unfounded as they are free to form a consortium with manufacturers of solar equipment to participate in the tender.
“Developers are free to tie up with manufacturers if they do not have the expertise in manufacturing,” a senior government official said. “SECI will make appropriate changes to the bid only if the concerns of developers are found to be valid,” the official said on the condition of anonymity.
Around 90% of the solar equipment used in the country is imported, and the government is planning manufacturing-linked tenders of up to 20 GW size to beef up local manufacturing of solar components. Industry watchers said developers and manufacturers will need to find a common ground to form any consortium. “Given both the
businesses are exposed to different kinds of risks, it is important that the risks and rewards are equitably balanced between the two parties,” said an industry executive who requested not to be identified.
Developers further argued that while power generation is perceived as low-medium risk given assured revenue, solar manufacturing is riskier given higher exposure to market, faster obsolescence of technology and need for continuous investment in R&D to stay competitive. All this could pose added challenge to IPPs with inadequate manufacturing experience in accessing project financing.
“Solar IPPs are being exposed to high degree of risk, which may not be in their interests and also not in the best interest of the country,” SPDA said in its letter to the minister. SPDA suggested that the developers could be charged a certain amount in future bids to create a solar equipment manufacturing fund, which could be disbursed as capital subsidy to help attract “credible and serious players” to invest in manufacturing facilities.
Source: economictimes.indiatimes
