"In order to fully realize our potential in the realm of solar energy, solar thermal projects need encouragement," stated Pranab Mukherjee. "I propose to fully exempt plant and equipment, etc. for the initial setting up of such projects from special countervailing duties (anti-subsidy import duty)."
According to research company, Bridge to India, the Indian solar thermal sector has "significantly lagged behind" its photovoltaics counterpart. To date, it explains, just 8.5 megawatts (MW) worth of concentrated solar power (CSP) have been installed in the country, compared to 481.48 MW worth of photovoltaics.
There is also said to be no domestic manufacturing base for CSP equipment, and only "a handful" of international suppliers. "As such, developers are finding it difficult to find reliable, low-cost options, a necessity to make their projects viable at the low tariffs following the NSM [National Solar Mission] auctions in the year 2011. With an absence of CSP technology in India and a lack of projects for reference, banks are exceptionally wary of funding CSP projects. This has led to stunted growth of the Indian CSP market," explained Bridge to India.
Another reason why the CSP market has not taken off as much as photovoltaics, it said, is due to water shortages in the country. "CSP as a technology faces water issues that will require … developers [to] come up with creative plant cooling solutions. There is also consternation about the 30 percent local content requirement," continued the statement.
Overall, Bridge to India believes that the announcement is positive, and will help to lower CSP project costs.