Faced with stiff targets, CPSEs look at importing solar equipment

To facilitate increased supply of solar parts and equipment, the finance ministry has also permitted CPSEs to import modules,

The four renewable energy implementing agencies (REIAs) - NTPC Ltd, Solar Energy Corporation Of India (SECI) Ltd., NHPC Ltd and SJVN Ltd - appointed by the government in April this year are faced with a tough target of tendering renewable energy (RE) projects to the tune of 50 gigawatts (GW) in the current financial year.

Besides, all the four Central Public Sector Enterprises (CPSEs) will have to bid out projects totaling 50 GW every year from here on. As per the trajectory, SECI and NTPC will have to invite bids for 15 GW each of RE projects, while NHPC and SJVN will have to do 10 GW each in the ongoing financial year.

But the problem is that India's own manufacturing units for RE projects are scarce at the moment. While there is almost no set-up in the manufacturing of parts for wind energy in India so far (almost every equipment is imported and assembled in the country), manufacturing in the solar sector is picking up but slowly.

India currently has a solar module manufacturing capacity of about 40 GW and solar cell production capacity of just about 5 GW. None of the existing facilities is enough to cater to the increasing demand in the country, which is why CPSEs are having to rely on imports of equipment and parts.

NTPC, India's largest power producer, also made it clear in its recent interaction with investors that it has no plan to get into manufacturing solar modules and cells. "We are looking at sourcing modules on longer term. We are not looking at manufacturing right now. But, we are in the process of finalising the bid process for long-term sources, maybe two or three years so that we can tie up on a long-term basis," said Mohit Bhargava, CEO, NTPC Renewable Energy Limited (NTPC REL) on May 19. NTPC REL is the renewable arm of NTPC Ltd.

The company has invited global bids for the supply of solar modules for projects totalling 1.46 GW. These include solar projects in Bhadla (625 MW), Shajapur (458.25 MW) and Bhuj (375 MW).

To facilitate increased supply of solar parts and equipment, the finance ministry has also permitted CPSEs to import modules, even as the basic customs duty continues to be levied at 40 percent for modules and 25 percent for cells.

India's current total renewable energy capacity, excluding large hydro and nuclear plants, reached 125 GW (125,159.81 MW) in March 2023, the latest monthly report by the Central Electricity Authority (CEA) showed. At present, RE has a share of 26.53 percent of the total installed generation capacity in the country.

Chasing an ambitious target of having 500 GW of renewable energy (RE) capacity by 2030, the government has released a detailed agency-wise break-up on inviting bids for RE projects totalling 50 GW for 2023-24.