Significant elements affecting the renewable energy business 

This article is a brief walk through about the imposition of various regulations to the manufacturing of solar modules and solar cells, in an attempt to encourage indigenisation in Solar PV sector. 

The following are four variables that have been affecting the rooftop solar industry and are posing many hurdles for customers, Financer, EPC companies, and manufacturers to retain their business models. 

Imposition of Basic Customs Duty 

The Indian government has recommended the adoption of a BCD for “Basic Customs Duties,” which already has a memorandum in place. The BCD of 40 percent on imported solar panels and 25 percent on solar cells is set to take effect on 1st April, 2022. While BCDs will play an important role in increasing local production and manufacturing, all companies will be able to build up manufacturing facilities in India and produce for the Indian market. A demand supply mismatch that must be rectified as soon as possible. Prices will undoubtedly change on April 1, causing a problem for EPC players and consumers where orders are placed with old rates. 

Raw material prices have been rising for the past two years in the key industrial sector. The PLI scheme will undoubtedly inspire some new manufacturers to enter the business, allowing us to capture the capacity necessary for India until 2030.

Impacts of Approved List of Models and Manufacturers (ALLM)

ALMM will also boost local manufacturer confidence in expanding their capacity. There are total 46 companies in ALMM list including us. It is believed that a favourable moment for manufacturers will arrive on April 1, with the government of India’s “Making India” and “Atmanirbhar Bharat” programs. 

DCR (Domestic Content Requirement) 

Because of the DCR, any product that requires raw materials must be made in the India.

Regardless, this is a “Domestic Content Requirement.” There is a demand for things created with India-made raw materials. Solar cells, regardless of capacity, are the fundamental raw material for solar panels. Solar cell production capacity is 16 GW, yet there is only 4 GW of registered capacity, approximately 1 GW of installed capacity, and working capacity. 

So, how can we strike a balance between solar cell supply and demand? So, the EPC players and developers in the industry, as well as customers, were led to believe that the ALMM list solely included Indian solar panels using Indian solar cells, whereas in reality, the ALLM list contains both DCR and non DCR solar panel manufacturers.  

The DCR solar panels are the ones that make use of Indian solar cells. This refers to solar cell manufacturing in India, as opposed to non-DCR solar panels, which use imported solar cells. As a result, both DCR and non-DCR solar panels are listed in the ALMM. When they are talking to a large group of individuals, they get confused. The aspects are DCR, non-DCR, and ALMM. The ALMM is a comprehensive list of DCR and non-DCR solar panel models added by the government. 

The cell problem may overcome, but if the 500 GW target for 2030 is yet to be met but the panel production problem must be addressed. 

Subsidies and the evolution of rooftop solar

Subsidy issues have confounded consumers in the residential sector. The government has made a great move for consumers, particularly residential users, and that will surely help the solar sector expand its reach. The business is still in its early stages. The supply chain for the solar sector is still in its infancy. Therefore, as the residential sector grows, it will definitely help dealers, distributors, and installers expand their operations, resulting in the creation of jobs in smaller towns. 

There has been uncertainty between the states for the last one and a half months or two months since these residential sectors are driven by the rooftop sector where net metering is driven by DISCOM. So state governments run DISCOM, the centre gave financial help, and the net metering activities was handled by the local DISCOM, which we are continuing to do nationwide. We are sticking to our 500 GW goal. 

The government has pursued these steps from the top down, such that even state-driven net metering regulations or home subsidy policies are being phased out in favours of a centrally driven subsidy policy for the residential sector. Both policies will be implemented simultaneously. Consumers have the option of opting for data-driven policies and central policies. Therefore, the ministry offers you a solution in a few months, and I am happy to report that it was discussed with the members of the ministry in January. On February 2, the MNRE issued an office memo and policy. 

As a result, members of the administration and the central government are working extremely hard to meet the goal. In addition, the national government is also doing extremely well, but we have to fix the issues at the local level and DISCOM level. As a result, if you want to reach the goal, the rooftop sector will play a critical role. In addition, in order to overcome these obstacles, DISCOM, EPC or developers, and policymakers such as governments, manufacturers, and financial institutes, must hand together and work together to build this industry to 500 GW by 2030. 

Expertise shared by Amit Arokar, Founder & Managing Director, ECE India Energies Pvt. Ltd.