In a provocative gesture, SunEdison, the US-based PV group, has abandoned a 20MW project it was awarded less than two months ago in India, claiming the country's domestic content requirements (DCRs) render it uneconomic.
The move, first reported by Bloomberg, will add further fuel to the simmering dispute between the US and India over the latter’s solar DCRs, an issue that has been swept up into a broader whirlpool of recent antagonism between the two countries.
SunEdison, one of the world’s largest developers of utility-scale PV, emerged as one of the biggest winners in India’s recent 750MW solar tender, known as Phase 1 Batch 2, which is part of the government’s National Solar Mission (NSM).
While SunEdison is not giving up on all of its projects on the boil in India, it will walk away from a 20MW project awarded in February’s tender because it will likely be unable to source enough quality India-made modules in time, the company claims.
Doing so would likely mean forfeiting a 20m rupee ($333,000) bidding deposit the company put down.
In its latest solar tender, India set aside half the capacity – or 375MW – for developers using locally sourced cells and modules.
In addition to raising the hackles of the US government, which recently filed a second claim against India’s solar-energy programme in the World Trade Organization, the DCRs were vocally opposed by many developers in India.
While India has sufficient module-assembly capacity, some of it built by foreign players, project developers argue that Indian cell producers like Indosolar and Tata Solar Power are not capable of making enough cost-competitive cells to meet the NSM's deadlines and requirements.
India’s module suppliers have in recent weeks been accused of raising their prices after February’s tender – a charge they deny. Bids for projects using foreign modules came in significantly lower than those forced to use locally made panels.
US-based First Solar has been one of the biggest module suppliers in India to date, due largely to a loophole in Round 1 that allowed unlimited amounts of foreign thin-film modules to enter the country. That loophole was closed in Round 2, in a move that will cost the US an estimated $200m-$300m in module exports.
While US and Indian officials have been trading hot words over the DCR issue for months to little avail, moves like the one made by SunEdison could jolt the debate. The participation of experienced foreign players like SunEdison is seen as key to ensuring quality and driving costs down in India’s solar programme.
Indian PV suppliers and some government officials argue that jobs growth on the manufacturing side will be critical to the success of the country’s solar industry over the long haul – and that DCRs are essential to foster that growth.
However, Bridge to India, a respected solar consultancy in India, calls the country’s DCRs a “failure”, saying that the volume of projects the country is putting to tender is too low to spur much domestic manufacturing growth, but is instead merely raising the cost of the country’s solar subsidy bill.