India’s domestic content solar auctions receiving little interest – Bridge to India

All 500MW tendered in Maharashtra saw less interest than other recent solar auctions across India. Flickr: Arian Zwegers

Appetite for participating in India’s solar auctions requiring domestically sourced PV equipment is low, with just one player bidding in the latest 50MW Domestic Content requirement (DCR) tender in the state of Maharashtra, according to consultancy firm Bridge to India.

Last week, only Indian conglomerate Adani submitted bids for the DCR capacity in Maharashtra, resulting in cancellation of the allocation and reopening of the tender.

Mudit Jain, consultant at Bridge to India, said: “Re-opening of the DCR tender does not augur well for similar DCR projects in the upcoming tenders”.

These auctions include DCR capacity of 25MW in Gujarat, 50MW in Uttar Pradesh and 100MW in Andhra Pradesh.

Jain said there are two main reasons for such “poor interest” in the domestic category. Firstly, international bidders, who have helped to drive prices down dramatically in recent open category auctions for solar, have historically not shown interest in the DCR category tenders. Secondly, tariff expectations in these bids are driven up, because locally-sourced modules are higher in cost than cheap imported modules.

India is in the middle of a World Trade Organisation (WTO) dispute with the US over the DCR requirement for locally sourced cells and modules to be used in certain Indian solar projects under the National Solar Mission.

However, last week, India proposed a compromise to the US by removing the DCR requirement from private sector solar projects and only continuing them in the public sector.

Since then, it has been widely reported that the two countries are close to resolving the three-year old spat. A WTO spokesman told PV Tech that a final ruling is expected on Wednesday, however, since then reports suggest there could be further delays as the issue could be resolved through talks between the two nations.

The recent tender in Maharashtra also involved 450MW to be allocated under Viability Gap Funding (VGF). Bridge to India has previously reported “subdued interest” in the VGF category partly due to the recent downward revision of the tariff for such projects to a fixed rate of INR4.43/kWh (US$0.065) down from INR5.43/kWh, as well as the fact that the off-taker will be Solar Energy Corporation of India (SECI) as opposed to the National Thermal Power Corporation (NTPC), which is seen as more reliable.

Tags: wto, dcr, india, bridge to india, mudit jain