Indian solar companies ask MNRE to make BCD case amid concern over 10 GW of projects

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RK Singh, Minister for New and Renewable Energy, speaking at a public address last year. Image: Youtube/MNRE

The National Solar Energy Federation of India (NSEFI), which represents companies across the PV value chain, has written to India’s central government raising concerns about the upcoming imposition of a basic tariff ( BCD) of 25% on PV solar cells and 40% on photovoltaic solar modules.

In one letter Addressed to Minister of New and Renewable Energy (MNRE) RK Singh, the organization said the BCD, which comes into force in April, would cause a “serial jolt” for solar developers and could increase the cost to consumers by 30 to INR 50/kWh (USD 0.4-0.66/kWh).

Accordingly, it asked the MRNE to grandfather the BCD for projects announced before its memorandum (MO) of March 9, 2021 who initially outlined the plans and the rate. He said up to 10 GW of projects could be affected if action is not taken.

He said the increased costs due to tariffs would “negatively impact the perception of the renewable energy industry which is seen as a cost effective alternative to conventional energy sources”.

To meet the additional cost, developers will be required to raise funds “via short-term working capital or additional equity at a much higher interest rate leading [to] economic inviability,” the letter said, adding that it would hamper business expansion plans and lead to lower than expected growth in the Indian solar industry.

The BCD was confirmed in India’s budget announcement on February 1, which was widely expected after an announcement in November 2021. The budget also saw a quadrupling of funding for the Production Linked Incentive Scheme (PLI ) of the country, designed to boost domestic PV manufacturing at the same time that BCD is intended to curb solar imports.

At the time of the budget announcement, Vinay Rustagi, managing director of research firm Bridge to India (BTI), said PV technology the budget would be a game-changer for domestic manufacturing and have a far greater impact than the LIP. A more detailed overview of the budget can be found here.

Talk to PV technology today, Rustagi said, “In addition to various other pressures such as increasing costs of various components and logistics and delay in availability of modules, this requirement is highly undesirable for developers.”

That said, Rustagi thought there was little chance of any exemptions or policy changes being made by the central government. “The chances of relief seem quite slim as the finance ministry does not seem to favor ad hoc waivers,” he said.

Tech PV sister site Energy-Storage.news at reviewed in detail the storage announcements included in the Indian budgetexamining the impact on the country’s storage sector.

And Premium PV Technology has broken down the key mechanisms and pathways available to companies looking to establish manufacturing facilities in India as well as more broadly define the instruments for investing in the country’s growing solar sector.

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