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Governance Structure: Renewable (Solar) Energy Sector in India

Governance Structure: Renewable (Solar) Energy Sector in India

India stands 4th globally in renewable energy installed capacity (including large hydro). India has set ambitious goals for this industry. India aims to become a net-zero economy by 2070 and have 450 GW in installed renewable energy capacity by 2030 from solar and wind energy, of which around 280 GW is expected from solar energy.

Under its updated Paris Agreement pledge, India has committed that about 50% of its installed electricity generation capacity will consist of non-fossil fuel sources by 2030. India has implemented multiple industrial policies to support and boost the renewable energy industry in India including the solar energy sector, and for moving towards achieving its renewable energy goals. Some of these policies include:

  • National Action Plan on Climate Change (NAPCC)- This program was launched in 2008, outlining a national strategy to adapt to climate change and enhance the ecological sustainability of India’s development path with a focus on reducing emission intensity. The plan was launched with 8 sub-missions. One of the missions which was directly related to the renewable energy generation industry is the National Solar Mission.
  • The National Solar Mission was launched under the NAPCC. It is an initiative of the union and state governments to promote solar energy in India. Its initial solar energy target was 20 GW by 2022, which was increased to 100 GW by 2022, in 2015. The installed solar capacity as of November 2022 is almost 62 GW, around three times the initial target.
  • National Wind-Solar Hybrid Policy- This policy was issued in May 2018 by the Ministry of New and Renewable energy with an objective to “provide a framework for promotion of large grid connected wind-solar PV hybrid systems for optimal and efficient utilization of wind and solar resources, transmission infrastructure and land”. A scheme for setting up of 2500 MW Inter State Transmission System connected wind-solar hybrid projects was sanctioned under this policy. Solar Energy Corporation of India has issued tenders for 10,100 MW of hybrid/ RTC/ Peak power capacity, and 5350 MW has already been awarded as of November 2021. A bid for 500 MW capacity of wind-solar hybrid project has also been issued by Maharashtra DISCOM.
  • Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyaan (PM-KUSUM)- This scheme was launched by the Ministry of New and Renewable Energy with an aim “to add solar and other renewable capacity of 30,800 MW by 2022 with total central financial support of Rs. 34,422 Crore including service charges to the implementing agencies”. The scheme will provide clean energy to more than 35 lakh farmers by solarising their agricultural pumps. It will also generate employment and provide a stream of income to rural landowners by utilisation of their dry or uncultivable land.
  • Central Public Sector Undertaking (CPSU) Scheme Phase-II- This scheme is “for setting up 12,000 MW grid-connected Solar Photovoltaic (PV) Power Projects by the Government Producers with Viability Gap Funding (VGF) support for self-use or use by Government/ Government entities, either directly or through Distribution Companies (DISCOMS)”. The objective of the scheme is to set up solar PV projects through government producers using domestic cells and modules and complying with WTO guidelines to facilitate environmental sustainability and national energy security for government purposes. The financial assistance can be availed by participating in Solar Energy Corporation of India’s bids under this scheme.

Multiple other schemes and policies have been implemented to support and boost the renewable energy industry in India. The PLI scheme is a major scheme announced recently to support the solar energy sector of this industry, by boosting the domestic manufacturing of solar PV cells and modules and components in India and reducing dependencies on imports.

PLI scheme for the renewable energy industry

The Production Linked Incentive (PLI) Scheme is a program by the Government of India that aims to boost domestic manufacturing in 14 selected sectors by providing financial incentives to companies that increase production within India. The PLI schemes are also expected to create lakhs of new jobs.

The PLI scheme for the renewable energy industry is “under ‘National Programme on High Efficiency Solar PV Modules’ for achieving manufacturing capacity of Gigawatt (GW) scale in High Efficiency Solar PV Modules”. The aim of the scheme is “to promote manufacturing of high efficiency solar PV modules in India and thus reduce import dependence in the area of Renewable Energy”. It also aims to enhance exports, strengthen the Atmanirbhar Bharat and Make in India initiatives, and generate employment. The scheme will provide financial incentives to manufacturers in the solar PV manufacturing industry. The manufacturers receiving incentives will be selected through a transparent selection process. The incentives will be applicable for a period of 5 years post commissioning of solar PV manufacturing plants. Sales of high efficiency solar PV modules from the domestic market will be incentivised.

The objectives of the scheme are: to build up manufacturing capacity of high efficiency solar PV modules in India, to bring cutting-edge technology to India for this manufacturing (all technologies are allowed but ones yielding better module performance will be incentivized) , to promote the setting up of integrated plants for better quality control and competitiveness, to develop an ecosystem for sourcing local materials in solar manufacturing, employment generation and technological self-sufficiency, and to encourage sustainable manufacturing practices and circular economy approaches. (MNRE)

The total scheme outlay is Rs. 4500 crore under Tranche I and Rs. 19,500 crore under Tranche II making the cumulative outlay Rs. 24,000 crore. Tranche II is expected to result in the addition of around 65 GW of fully or partially integrated solar PV manufacturing.

The scheme is expected to bring direct investment of around Rs.94,000 crore. It will lead to the creation of manufacturing capacity for Balance of Materials like EVA, Solar glass, Backsheet, etc. It is expected to generate direct employment of about 1.95 lakh people and indirect employment of around 7.8 lakh people. The import substitution will be approximately Rs. 1.37 lakh crore. It will also give impetus to research and development activities in this sector, which may lead to more efficiency in the products and in manufacturing.

Government Organizations Involved

The government ministry responsible for this scheme is the Ministry of New and Renewable Energy (MNRE). The MNRE is the nodal agency of the Government of India for all matters relating to new and renewable energy. The broad aim of the MNRE is “to develop and deploy new and renewable energy to supplement the energy requirements of the country”. Its scope includes solar energy, wind energy, biogas, small hydro, and other renewable energy sources.

To implement Tranche I of the PLI scheme,, the Ministry of New and Renewable Energy has appointed Indian Renewable Energy Development Agency Limited (IREDA) as the implementing agency on its behalf. IREDA is a public limited government company under the administrative control of the MNRE. It was established as a Non-Banking

Financial Institution in 1987. It is engaged in promoting, developing and extending financial assistance for setting up projects relating to new and renewable sources of energy and energy efficiency or conservation. Its motto is ‘Energy For Ever’. Necessary funds for implementing the scheme will be drawn from budgetary allocations to the MNRE.

The implementing agency for Tranche II of this PLI scheme will be the Solar Energy Corporation of India Limited (SECI). The SECI is a company of the MNRE, established to facilitate the implementation of the National Solar Mission. It is the only Central Public Sector Undertaking dedicated to solar energy. Its mission is “to become the leader in development of large scale solar installations, solar plants and solar parks and to promote and commercialize the use of solar energy to reach the remotest corner of India” and “to become leader in exploring new technologies and their deployment to harness solar energy”.

SECI will be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities as assigned by MNRE from time to time.

SECI will have the right to physically inspect an applicant’s manufacturing units and offices. It may take help from National Institute of Solar Energy (NISE) and National Accreditation Board for Testing and Calibration Laboratories (NABL) accredited labs, etc. for verification of measurements. A Project Management Unit (PMU) will be established in the MNRE to assist MNRE and SECI in the scheme’s implementation..

Application Procedure

For Tranche I of the scheme, the application process was administered and managed by IREDA. An initial application invitation document was issued on 25 May 2021. The process was facilitated online, and application documents were available to download on www.ireda.in.

Applicants were required to indicate the yearly PLI values based on their expected sales of Solar PV modules in Megawatts, base case PLI(Rs/Watt) for which their product is eligible, expected local value addition and tapering factor as per the scheme guidelines. Applicants had to mandatorily register themselves on the bidding portal for which the link was provided on the IREDA website to participate in the selection process. Registration and registration formalities was the sole responsibility of the applicants. All required documents and formalities for the bidding portal registration were given on the application document and the IREDA website. Responses had to be uploaded on the bidding portal in accordance with the procedures and provisions given in the application documents.

For Tranche II of the scheme, the application process including the receipt of applications, examination and appraisal of applications is being handled by SECI. The SECI issued an application or bid invitation notification on 18 November 2022. The bidding process was conducted online. A single stage, two envelope bidding procedure was adopted, which will proceed as detailed in the Request for Selection (RfS) document.

Bidders have to mandatorily register themselves on the portal https://www.bharat-electronictender.com (“ETS portal”) through M/s Electronic Tender.com (India) Pvt. Limited to participate in the bidding process. Registration and uploading of bids is the sole responsibility of the bidder/applicant.

Bidders have to submit the bid proposal along with non-refundable RfS Document Fee, Bid Processing Fees and Earnest Money Deposit (EMD), complete as per the Bid Information Sheet.

RfS documents include Eligibility Criteria, Technical Specifications, various Conditions of Contract, Formats etc. They can be downloaded from the ISN-ETS Portal or from SECI’s website. The details and list of documents required in the bidding process can be found in Section 3 of SECI’s notification document (Page 19-33).

SECI reserves the right to cancel, withdraw, or defer the invitation for bids.

Bidders have to commit minimum integration across solar cells and modules, with the objective to promote the setting up of integrated plants for better quality control and competitiveness. Based upon the degree of proposed integration, bidders can opt for bidding for one of three baskets:

Source: SECI RFS document

Bidders also have to submit the following details based on which the award of capacities for PLI will be determined and PLI will be calculated:

The applicant will also have to declare the type of technology proposed to be set up, plan for local value addition, and the estimated employment generation and exports during the tenure of the scheme.

The bid submission deadline for this scheme is 9 January 2023 in online format, and 11 January 2023 for hard copy.

Eligibility Criteria

Applicants/bidders applying for incentives under this scheme have some common eligibility criteria to bid and to qualify for receiving the scheme benefits. For Tranche II, for which applications are ongoing, these have been notified in detail in these MNRE and SECI documents (To view the full list of eligibility criteria, and in detail, please visit the hyperlinked pages).

General Eligibility Criteria

  • The bidder manufacturer for this PLI scheme can be a single company, or a joint venture or consortium of multiple companies. However, in the case of a joint venture or consortium, each partner/company is allowed to tie up their manufacturing capacity with another partner/company for one bid only..
  • Manufacturers who have already availed benefits under the MNRE’s tender for solar power purchase agreements linked to PV manufacturing or the Ministry of Electronics and Information Technology’s (MEITY) SIPS/M-SIPS/SPECS schemes, are not eligible for receiving benefits under the PLI scheme. However, manufacturers can avail any benefit under SIPS/M-SIPS/SPECS/Manufacturing Linked Tender for the difference of offered bid capacity and double the PLI awarded capacity.
  • Goods, equipment, and services for which contracts have been concluded by technically qualified bidders under Tranche I of the scheme after 11/11/2021 will be eligible for counting towards calculating benefits under Tranche II of the PLI scheme. For any other case to be eligible for PLI disbursement, the contract for capital equipment/services must be concluded after the issuance of the letter of award.
  • A foreign company can also participate at the RfS stage on a standalone basis or as a member of a consortium or a joint venture. If selected, it has to form a “Special Purpose Vehicle” (SPV), i.e. an Indian Company registered under the Companies Act, 2013,  as its subsidiary company.  It has to have a minimum 51% shareholding in the SPV. This has to be completed within 90 days of issuance of Letter of Award.
  •  Limited Liability Partnership (LLPs) are ineligible for participation.

Financial Eligibility Criteria

The Net Worth of the Bidder should be equal to or greater than the values as given in the table below. It will be considered as on the last date of the previous Financial Year or as on the day at least 7 days prior to the bid submission deadline.

The Net Worth to be considered for this clause will be as calculated in accordance with the Companies Act, 2013.

Manufacturing Capacity criteria

  • In order to qualify for this PLI scheme, the applicant manufacturer must commit to setting up a manufacturing plant with a minimum capacity of 1,000 MW (1,000 MW each for all individual stages included in the manufacturer’s proposal).
  • The maximum capacity that can be bid for will be 10 GW for the P+W+C+M category, and 6 GW each for the W+C+M and C+M categories.
  • The maximum capacity that will be awarded to one bidder will be 50% of the capacity to be set up by the applicant. The awarded maximum bid capacity will include any capacity awarded under Tranche I of the scheme.

Module Performance and Local Value Addition (LVA) criteria

Manufacturers will have to fulfil certain minimum values of Module Performance and Local Value Addition (LVA) for being eligible for PLI, as follows:

Source: SECI and MNRE

Incentives under the scheme

Category-wise baskets

The capacities will be allocated in separate categories based on the fund allocated for each category as follows:

Calculation of PLI and capacity allocation

The PLI for allocated bid capacity will be calculated year-wise as a product of following four components:

  • Base PLI Rate (in Rs./Wp)
  • LVA Factor
  • Tapering Factor (TF) for the particular year
  • Yearly sales [in Watt peak (Wp)] corresponding to the manufacturing capacity eligible for claiming PLI.
Formula for calculating PLI

Base PLI rate

On the basis of module efficiency and module’s temperature coefficient, Base PLI Rate will be determined in Rs./Watt peak as per the performance matrix tables given in the MNRE notification document. (The table for the first basket is given below. Please visit the hyperlinked site to view the tables for other baskets).

Source: MNRE

The bid quoting the highest efficiency in the first year of production will be allocated the admissible capacity first. If there is a tie in efficiency in the first year, the bid quoting the highest efficiency in the second year will be allocated the admissible capacity first, and so on.

Disbursement of PLI

  • The manufacturers selected under this PLI scheme will be eligible for getting the incentives on an annual basis on sales of high efficiency solar PV modules for 5 years from commissioning of the manufacturing unit, or 5 years from scheduled commissioning date, whichever is earlier.
  • In case of delayed commissioning, the PLI period will be reduced by the period of the delay from 5 years.
  • A team constituted by MNRE or SECI will visit the manufacturing unit to verify promised extent of integration, manufacturing capacity, efficiency and temperature coefficient of modules, immediately after its commissioning.

The timelines for the commissioning of the manufacturing units is as follows:

  • For the P+W+C+M basket, within 3 years from the date of the Letter of Award.
  • For the W+C+M basket, within 2 years from the date of the Letter of Award.
  • For the C+M basket, within 1.5 years from the date of the Letter of Award.

Further points, details, clauses, and conditions for the above sections, as well as other sections such as penalties, project categories, sustainable manufacturing guidelines, etc. are given in the MNRE and SECI notification documents.

Outcomes of the PLI scheme for Solar PV Module Manufacturing.

  • The tender for Tranche I of the PLI scheme in 2021 received strong response from bidders. It was oversubscribed by 5.48 times. Manufacturers who submitted bids quoted a cumulative capacity of 54.8 GW for polysilicon, ingot-wafer, cell, and module manufacturing.
  • In November 2021, IREDA announced a list of successful bidders under Tranche I of the scheme.
  • Reliance New Energy Solar’s PLI award amount was Rs. 1917 crores for a capacity of 4 GW.
  • Shirdi Sai Electricals was awarded Rs. 1875 crore for a capacity of 4 GW.
  • Adani Infrastructure was awarded a PLI of Rs. 663 crore out of the total quoted amount Rs. 3600 crore under the bucket filling method for a capacity of 737 MW.
  • The Tranche II of the PLI scheme for solar PV module manufacturing is still in the bidding process. Updates related to the scheme, including the list of successful bidders will be announced and notified on the SECI website’s updates section.
Dhruv Chaudhari

Dhruv Chaudhari is a Research Intern at Tatvita. Presently he is pursuing his bachelors in the Liberal Arts department at the Savitribai Phule Pune University.    

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