Norwegian independent power producer (IPP) Scatec said it has put on hold a 900MW solar project in India due to a lack of supply of domestic modules and the upcoming introduction of a new import duty.
Having announced a partnership with Indian solar developer ACME last year to realise the PV plant in the state of Rajasthan, Scatec has now moved the project from backlog to pipeline, citing both India’s 40% basic customs duty (BCD) on modules, which is due to come into effect this April, and “limited domestic capacity”.
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Scatec CEO Raymond Carlsen said that although there will be a change in India’s market from modules being imported from China to being sourced locally, the company is uncertain about how quickly that is moving.
“There is a gap in between the price level that we have seen from China and the expected price level in India for modules,” Carlsen said during a conference call with investors following publication of the company’s 2021 financial results.
“We expect that over time, the Indian production lines for modules will approach the same cost level as what you have in China.”
Alongside the 40% tariff on modules, India will also introduce a 25% BCD on solar cells from 1 April as part of government ambitions to make the country’s solar sector less dependent on imports.
Last year India imported more than 80% of its solar cells (unassembled) from China, according to consultancy Fitch Solutions, which said in a recent report that while the new duties represent a positive step to spur domestic manufacturing in India, the market “might not be ready for such an aggressive push yet”.
Scatec’s 900MW plant – in which the IPP and ACME each hold a 50% stake in – has a US$400 million capex and is backed by a 20-year power purchase agreement with Solar Energy Corporation of India (SECI).
Although construction on the installation had due to begin last year, Carlsen said it will now be part of the company’s pipeline “for the time being”.
Boosted by its acquisition of hydropower developer SN Power, Scatec’s revenues in 2021 jumped 62% year-on-year to NOK4.62 billion (US$525 million), while EBITDA more than doubled to NOK2.69 billion (US$305 million).
The company’s backlog of projects totals more than 2GW – including solar plants in markets such as Brazil, South Africa and Tunisia – all of which are expected to begin construction this year.
Conference call transcript from Seeking Alpha.
