Indian independent power producer (IPP) Azure Power has made a US$12.9 million investment in solar manufacturer Premier Energies while also locking in domestic PV module supply from the company.
Azure has agreed to procure up to 600MW of solar modules in each of the next four years from Premier, which states its module manufacturing capacity to be 1.25GW.
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Azure will also make a US$12.9 million investment in the company – split between a subscription for equity shares and convertible debentures – which will help Premier establish a 1GW cell and module manufacturing project in India.
Chiranjeev Saluja, managing director at Premier Energies, described the deal as a “first-of-its-kind strategic partnership” between an IPP and solar manufacturer in India.
“Having a long-term supply visibility is an important factor towards de-risking our business. Premier is operating one of the most advanced state-of-the-art solar cell and module lines in the country, and we are pleased to partner with Premier,” Alan Rosling, chairman at Azure Power, said.
Chasing a 450GW installed renewables capacity target by 2030, India’s solar sector is facing headwinds in the shape of soaring demand for India-made PV modules after the country’s government implemented tariffs of 40% on imported PV modules and 25% on cells.
That basic customs duty (BCD), coupled with a production linked incentive to support manufacturers, have been implemented to stimulate procurement of domestically manufactured goods under Prime Minister Modi’s ‘Made in India’ initiative. The policy, however, has not come without its costs.
Spiralling module costs has risked threatening the economics of 25GW of solar projects in India – 5GW of which are at high risk – and stakeholders have warned of increasing tariffs for solar projects if the situation does not ease.
But last week India’s energy minister RK Singh publicly resisted calls to tweak the BCD, stating that he did not “want any Chinese imports”.