Phase two of India’s Solar Mission

India’s solar ambitions are plain to see, however the development of the photovoltaic market in the country has been one of fits and starts. While the need for new renewable energy capacity in the market is apparent, financing challenges have continued to hamper the development of more photovoltaic capacity.

The difficulty in raising affordable finance for photovoltaic projects is one of the issues that the draft second phase of the JNNSM tries to tackle, in the document released yesterday. The proposal to conduct a reverse auction for 1.65 GW, for construction beginning next year, including grants for up to 40% of the upfront construction costs.

A requirement to shift the responsibility for managing 60% of the 9 GW total target to state governments may undermine attempts to facilitate cheaper finance for photovoltaics in India. Bloomberg New Energy Finance has reported that lenders in India are more ready to deal with schemes administered by the national government.

Cutting domestic content requirements?

In a move that may have a major impact on the Indian photovoltaic market, the phase two JNNSM has proposed removing domestic content requirements. It may be safe to assume that this would be devastating for domestic crystalline-silicon (c-Si) manufacturers, but it could also bring down the cost of photovoltaic installations in the country.

The move could also hamper somewhat the success enjoyed by First Solar in the Indian market at present, which profits from thin film modules being exempt from domestic content requirements and also U.S. Ex-Im bank loans.

In contrast to any moves to remove domestic content requirements are antidumping investigations currently underway in India, into Chinese, Taiwanese, Malaysian and U.S. manufacturers. Whether this policy direction, or the one advocated in the draft phase two of the JNNSM is unclear.