The credit rating agency, ICRA on Monday asserted that the production-linked incentive (PLI) scheme for solar PV modules is positive for domestic original equipment manufacturers and it would help improve cost competitiveness for the domestic industry.
“The benefits available under the PLI scheme along with the imposition of basic customs duty (BCD) on imported solar PV cells and imported solar PV modules are likely to improve the cost competitiveness of domestic PV module manufacturers against imported modules by more than 10% at the prevailing imported module prices, under the assumption of backward integration up to cells,” the rating agency said in its latest report.
According to Girishkumar Kadam, Co-Group Head & Vice President – Corporate ratings, ICRA, with the focus on the development of integrated solar module manufacturing facilities, which is both capital and technology-intensive, timely selection of such projects under this scheme and implementation of the manufacturing capacities with value addition thereafter remains important to reduce the dependence on module imports.
“The PLI scheme on imported modules and cells from April 2022 will improve the cost competitiveness of domestic manufacturers vis-a-vis imports. The scheme outlay to support 21 GW of module supplies from domestic original equipment manufacturers (OEMs) over a five-year period,” the ICRA report said.
Recently the Ministry of New & Renewable Energy notified the guidelines for the PLI scheme to promote the domestic manufacturing of high-efficiency solar modules and thereby reduce dependence on imports in the solar power sector. The scheme has been approved with a financial outlay of Rs 4,500 crore over a period of five years.
As per the scheme norms, beneficiaries will be selected through a bidding process, with the applicants proposed to be evaluated based on the extent of integration and capacity. The criteria also include minimum integration across cells and modules; minimum manufacturing capacity requirement of 1 GW and a certain minimum level of module performance.
Under the scheme bidders shall be ranked based on the extent of backward integration and proposed manufacturing capacity and then selected based on the PLI requirement quoted for the five-year period.
While both the greenfield and the brownfield manufacturing units are eligible for PLI, the PLI rate for brownfield units shall be 50% of the rate for brownfield units. The maximum capacity that can be offered to any single bidder is 50% of the bid capacity or 2000 MW (whichever is lower) to enable the participation of at least three manufacturers under the scheme.
“At the base PLI rate of Rs 2.25 per watt power, the PLI outlay of Rs 4,500 crore can support manufacturing and sale of 21 GW of solar PV modules over a five-year period, translating into 4 GW per annum, at the base module efficiency specified in the guidelines and considering a full backward integration of the proposed units,” Vikram V, Sector Head & Assistant Vice President – Corporate Ratings, ICRA, said.
As per the scheme, the manufacturers are required to commission the units within 1.5 to 3 years from the date of sanction. The timeline increases as the integration move from cells & modules to include wafers, ingots and polysilicon.