Solar goals stymied in India on lack of interest

NEW DELHI • India’s effort to spur its own solar power equipment industry seems to be failing, with only one company so far bidding for the nation’s tender to set up a factory.

The tender, which had already been downsized and delayed for months, received a single bid, from Azure Power Global Ltd, according to Anand Kumar, secretary at the Ministry of
New and Renewable Energy.

And the company planned to only build enough capacity to meet about one-fifth of what the Indian government is seeking, he said.

Azure Power officials didn’t immediately reply to an email and phone call seeking comment.

The tender includes a requirement that the factory developer also build an associated solar power project that would sell electricity at fixed rate of 2.85 rupees (17 sen) per kWh, which prospective developers have said is too low.

“What I am trying to do is to get the best rate for utilities, who should be the ultimate beneficiary,” Kumar said, adding that the government is trying to find out which rate
is appropriate.

The lacklustre response to the tender underscores the challenges faced by the South Asian nation to develop a domestic solar manufacturing industry.

Global equipment makers, including China’s Trina Solar Ltd and Canadian Solar Inc, have been reluctant to build in the country because of record low solar power tariffs, as well as tender terms that include capped power prices, quick timeframe to build the project and requirements to build a fully integrated plant and solar farm.

The weak interest may also reflect that investors haven’t been encouraged by the two-year safeguard duty on imports, initially set at 25%, that India has slapped on global competitors in a bid to kick-start its domestic industry.

The deadline for the tender, for 3GW of manufacturing capacity and 10GW of solar projects, was originally in July. The single bid contrasts with the government’s initial optimism after it was first floated, when Solar Energy Corp of India Ltd MD JN Swain in June said nearly 50 foreign and domestic investors showed interest. — Bloomberg