Solar power developers flouting domestic content norms may face penal action

India plans to penalize solar power firms that are using foreign equipment in projects awarded on the basis that they would only use locally made solar panels and cells

Utpal Bhaskar
Updated27 Nov 2017
As solar panels account for nearly 60% of a solar power plant’s cost, companies have been using Chinese imports to reduce costs.
As solar panels account for nearly 60% of a solar power plant’s cost, companies have been using Chinese imports to reduce costs.

New Delhi: India plans to penalize solar power developers which are using foreign equipment in power generation projects awarded on the basis that they would only use locally made solar cells and modules, according to two government officials.

To curb such malpractices, the government will make it mandatory for developers to publicly disclose the radio-frequency identification (RFID) tag information of the panels used in solar projects. It will also be incumbent on the developers to share the RFID list of rejected panels.

Mint reported on 7 September that poor quality Chinese solar modules, rejected by developers, were being sold in the domestic market at a discount.

These projects, awarded under the so-called domestic content requirement (DCR) route by state-owned firms, are required to use solar cells and modules made in India. Also, under the solar roof-top scheme, the government gives subsidy on the condition that the modules should be made in India wherein solar cells can be imported.

“We are trying to attack that (malpractices). We have seen that under the DCR projects there have been instances wherein Chinese imports have been used,” said a senior government official, one of the two cited above, requesting anonymity.

Solar modules or panels account for nearly 60% of a solar power project’s cost. For China’s solar panel manufacturing capacity, estimated to be around 70 gigawatts (GW) per year, the major markets are the US, India and China itself.

“A case has been brought to our notice wherein a firm has put Chinese component under the DCR programme. We will take action against such cases. We are looking into such practices…We are looking into cases wherever we receive a complaint that under the DCR somebody has used foreign component,” the official added.

Indian companies are aware of the malpractice.

“The entire policy faces a risk when companies start flouting the existing rules which are there to promote domestic manufacturing and local jobs. It’s basically kind of profiteering out of a policy custom made for local jobs and it’s very important that the investigation is carried out in a time-bound manner and suitable action is taken against the people who are doing such activities,” said Ketan Mehta, managing director and chief executive of Rays Power Infra, a solar project developer.

The Indian government introduced stringent quality norms in August for solar equipment to be sold in the country and made the destruction of sub-standard equipment mandatory.

“We are planning that RFID of each module has to be captured and uploaded somewhere so that cross-checking happens. Rejected modules RFID will also be captured,” said another government official who also didn’t want to be identified.

Also, there have been allegations of government subsidy being availed multiple times on the same set of panels at multiple locations.

“Problem is more where it is subsidy related. A case in point being roof-top solar projects where the common man doesn’t know what quality he is getting. All those things have to be captured in RFID,” said the second government official cited above.

Of India’s plan to add 100 gigawatt (GW) of solar power capacity by 2022, 40GW is to come from roof-top projects.

“It can also happen that someone puts a panel on a rooftop and claims subsidy and then removes it and puts it on another rooftop to claim subsidy. There is a possibility of it happening. This kind of thing will prevent it,” added the second official.

Queries emailed to a spokesperson for the new and renewable energy ministry on 16 November remained unanswered.

“Tracking of modules on a central data base not only gives convenience to the buyer that they can check the manufacturing date, name of the module and its quality on a central data base but also it will help government in tracking a single module not being used on two or three places and claims the benefits again and again in terms of subsidy and shift to some other places,” added Mehta of Rays Power Infra.

With the average efficiency of a solar panel usually just 16-22%, sub-standard quality will impact generation. India has also been conducting an anti-dumping investigation on solar equipment from China, Taiwan and Malaysia.

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