Before India’s new pro-solar Prime Minister Narendra Modi can settle into office, a glut of troubling solar issues await resolution.
The leader of the Bharatiya Janata Party (BJP), Modi was announced India’s new prime minister and will be sworn in on May 26.
The day before, India’s Department of Commerce re-opened a year-and-a-half old solar anti-dumping dispute. The trade spat could undo post-election optimism for India’s solar future by imposing anti dumping duties on solar panels and cells from China, Taiwan, the US and Malaysia.
Pre-election Modi said solar should be used to gain energy self-sufficiency and empower people. In its ‘vision document’ the BJP plans to eradicate shortages of electricity, by giving every home at least one light bulb’s worth of electrification, by harnessing solar power.
The idea was first promised by Modi’s predecessor, Monmohan Singh to be complete by 2012, a goal which was missed. Bloomberg reported Modi will continue the policy with a five-year plan to reach national electrification by 2019.
Releasing its solar 2014 forecast yesterday, analysts Mercom said the local solar industry “hopes that the new Modi administration will put an end to the unpredictability and bring some badly needed order to the energy sector".
Mercom also highlight Modi’s good deeds from the past. In Gujarat Modi policies used solar energy to pursue 100% energy access by 2019.
It is uncertain if Modi will decide the court evidence of dumping requires anti dumping duties, or side with the Ministry of New and Renewable Energy (MNRE), which is against anti-dumping pricing.
Mercom stated that manufacturers who previously supported anti-dumping investigations are now opposed. “They see the harm that will be done – choking project development by increasing costs while the industry is still trying to find its legs. They now seem to understand that they would all benefit from a larger market,” Mercom’s report states.
“[The] imposition of an anti-dumping duty will be detrimental, increase uncertainty, and raise solar power prices. Moreover, anti-dumping duties will hurt local manufacturing as higher component costs will make project economics unworkable, freezing project development activity,” said Raj Prabhu, CEO and co-founder of Mercom.
Mercom has repeatedly opposed anti-dumping measures, stating in its update that it is “bad policy” and if duties are imposed, Mercom will recalculate its 1GW installation forecast for 2014. Mercom’s solar installation prediction for 2014 so far totals 444MW.
Today India’s solar trade association, made up of manufacturers and developers, to financiers and engineers, the National Solar Energy Federation of India (NSEFI), published an open letter to the directorate of anti-dumping duties.
The NSEFI has called anti-dumping duties a “suicidal step” which would increase solar energy costs by an estimated 25-30%.
Addressed to Shri D P Mohapatra, the director for the Department of Commerce the strongly worded letter called for holistic and inclusive solar policies that benefit the industry as a whole – rather than targeted policies on specific sections that could harm the industry as a whole.
NSEFI said that while tariffs are decreasing and the industry is still developing, anti-dumping duties would be “counter productive” causing a “disastrous and a scary scenario”.
US solar panel manufacturer First Solar, which has dominated India’s thin film supply, and Indian developer Welspun have also spoken out against anti-dumping duties.
Welspun told PV Tech that forcing the use of modules made by indigenous manufacturers “will raise the project cost, thereby making projects financially unsound”.
NSEFI suggests as an alternative to boost domestic manufacturing, imported inputs for solar panels, whether foreign or domestic should be exempt from tax, with long-term grants provided and international joint ventures encouraged for a “win-win situation”.
At present, the letter argues that domestic manufacturers cannot meet the demand of the national solar mission (JNNSM), or the expanding state, off grid and rural solar ambitions, and if anti-dumping duties were imposed, the entire solar energy programme of India “will suffer a jolt making it unviable” and duties are “heading for a disaster of high magnitude with present and future investment in serious jeopardy”.
The NSEFI also spoke out against the US’s complaint to the World Trade Organisation (WTO) about the JNNSM 375MW domestic content requirement (DCR). There are also solar energy issues of land disputes, and worries on climate change facing the new Modi-led government.