New Delhi | Bengaluru: India’s efforts to promote domestic solar manufacturing through a large-scale tender have received damp response as most project developers did not submit bids, forcing authorities to extend the deadline for bid submission.
The tender in question was floated by the Solar Energy Corporation of India (SECI) earlier this year, seeking to set up 10 GW capacity of solar power projects linked with 3 GW solar equipment manufacturing capacity.
Several large players in the sector ET spoke with, are expected to stay away from the manufacturing-linked solar tenders, as they consider the format to be inherently ‘faulty’. The executives did not wish to be named citing the sensitivity involved.
This comes as a setback to the government’s domestic manufacturing initiatives, and a tender which the government claims to be the largest of its kind in the world, seems to have turned a damp squib.
Project developers have in the past expressed their concerns with the tender, stating that it forces them to enter manufacturing business, which is not part of their core competency. Companies can bid for minimum 2,000 MW PPA, pursuant to which 600 MW solar manufacturing capacity must be set up.
“Naturally, it is clear that the response for the tender was not strong, because of which SECI had to further extend the deadline,” a government official told ET on condition of anonymity.
SECI on late Thursday evening issued a notification extending the bid submission deadline to October 12. The bids were initially due on Thursday.
“Prospective bidders have asked for some more time for bid preparation, working out pricing, among other requests,” said a SECI official who did not wish to be quoted.
India is dependent on China for 85% of the solar equipment used in the country, and developers will find it difficult to compete with Chinese solar panels without any support from the government. The government’s decision to set the maximum permissible tariff for the tender at .`2.75 per unit, is another dampener, according to the industry.
“The off-take commitment which the government is giving under the tender is barely two years while you need at least five years to match China’s efficiency, and create that kind of supply chain in India,” said an executive of a leading IPP who did not wish to be quoted.
Companies are also worried about the cancellation of power purchase agreements, the executive said. SECI recently cancelled solar bids received from ReNew Power, SoftBank, among other large players, on the grounds that the price quoted by the developers were too high.
“The tariffs for the tender are too low. At .`2.75 per unit, it’s really difficult to work your costs. Given China has higher cost efficiency, anything manufactured in India should be able to compete with Chinese panels,” the executive quoted above added.
The manufacturing component in the tender had already been scaled down from 5 GW to 3 GW after government feared that developers could jack-up tariffs in the tender. ET had reported this on September 3.
“It is really unfortunate that the first ever manufacturing contract should have received such a setback. Lenders see manufacturing as a risk, so the developers and manufacturers had requested SECI to dissociate generation and manufacturing, which they did not do,” said another industry source.
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