India confirms 50/50 PV content split

Half of the 750MW of PV capacity up for grabs in India’s next bidding round will be reserved for projects using domestically-made cells and modules, the government has confirmed. 

The 375MW to be carved out for projects using locally made kit may be seen by some as a temporary victory for foreign manufacturers, favoured by many Indian developers for their lower cost and more established technology.

India’s struggling band of PV manufacturers had pressed for even more stringent requirements, and as recently as this summer major Indian newspapers were claiming that 75% of the capacity in the latest round would be reserved for projects using local cells and modules. 

The confirmation will have no immediate bearing on the World Trade Organization complaint the US has brought against India’s local-content requirements for PV.  The Indian government has insisted that the local-content requirements will be further ratcheted up in future rounds.

However, many in India’s fledgling solar space see such restrictions as a grave threat to growth, given India’s current lack of a competitive PV manufacturing sector – and particularly at the cell level.

The announcement was made as the Ministry for New and Renewable Energy unveiled the final bidding guidelines for the next window of National Solar Mission (NSM) projects, known as Phase 2, Batch1.

The new NSM bids – the first to be accepted by the government in several years – are due in late November, and follow the chequered performance of Phase 1.

Of the 950MW of capacity allocated during the two batches of Phase 1, just 420MW had been commissioned by the time the phase formally closed in March, with many projects struggling to get past the finish line.

Phase 2, Batch 1 projects must be between 10MW and 50MW in size, and can use any kind of PV technology. Each developer – including subsidiaries and other related entities – can win a maximum three projects and 100MW of capacity. 

Delhi also confirmed that it will make 18.75bn rupees ($303m) available for the next batch of projects, to be awarded as part of the new Viability Gap funding scheme.

Under the scheme, developers will be paid 5.45 rupees per kWh of power generated as a baseline. Beyond that they will bid for additional money – up to 30% of the project cost – in what effectively remains a reverse bidding process.

The final batch of Phase One projects saw an average bid of 8.77 rupees/kWh – and went as low as 7.49/kWh.  Phase 2 of the NSM will run through 2017 and targets 3GW of capacity. India has about 2GW of PV capacity at present.