The Indian government is planning to float tenders for setting up 20 Giga Watts (GW) of solar power capacity in one go, hoping to spur local manufacturing of solar power equipment.
Most solar power developers in India have been sourcing solar modules and equipment from cheap sources like China and the 20 GW tender is stated to be an attempt to spur domestic manufacturing of solar power equipment.
While it is difficult to believe it would attract local manufacturers of solar power gear, and provide a boost to the National Democratic Alliance (NDA) government's Make in India initiative, it would surely help further lower the country's solar power tariffs.
Domestic manufacturers have so far accounted for only 10 per cent of all solar power projects floated by state agency NTPC and it is not known how the 20 GW tender will attract Indian manufacturers with further expected fall in tariffs.
India has set an ambitious 175GW clean energy target by 2022, of which 100GW is to come from solar projects.
Officials at the ministry of new and renewable energy (MNRE) expect mega bids to help bring down manufacturing costs for Indian solar power equipment makers. However, this would help Chinese manufacturers better as they already have the lowest cost base.
The tender, however, is at the conceptual stage and once people see such projects as viable, then manufacturing can kick in, said a second person aware of the development, who declined to be named.
Solar modules, or panels, account for nearly 60 per cent of a solar power project's cost and this could be feast to China's solar panel manufacturers, with a capacity estimated to be around 70GW per year, whose major markets abroad are the US, and India.
The solar industry has welcomed the move hoping that problems associated with the sector are adequately addressed.
The tender comes against the backdrop of concerns that declining green energy tariffs may result in electricity offtake commitments from wind and solar projects at higher tariffs not being honoured.