India to Close Solar Import Loophole in Energy Auction

India plans to close a loophole before its next solar-power auction to stop companies from importing thin-film panels from overseas suppliers like First Solar Inc. (FSLR) for projects that otherwise must be built with local equipment.

The government will invite developers by the end of May to bid for 750 megawatts of solar capacity, Tarun Kapoor, joint-secretary at the Ministry of New and Renewable Energy, said in a telephone interview. About 300 megawatts of that will be required to use locally made solar cells and panels, and may not import thin-film photovoltaic devices, he said.

Developers previously were able to skirt local sourcing rules on a portion of auctioned projects by opting for thin-film technology. Those devices, which tend to be cheaper, were exempt from the import restrictions on crystalline silicon panels made by companies such as China’s Suntech Power Holdings Co. (STP) Traditional crystalline panels are silicon-based, while thin-film technology coats panels with materials such as cadmium telluride.

“This time domestic content requirement will also include thin film,” Kapoor said on May 3.

The government will also extend grants to the solar industry for the first time, offering as much as 18.75 billion rupees ($348 million) to cover 30 percent of upfront project costs. Previously, it supported the solar industry by buying power at above-market rates.

The government is offering 25 million rupees per megawatt to projects that will range in capacity from 10 to 50 megawatts, according to auction guidelines released last month. Developers will submit bids specifying the amount of funds they seek, and those needing the least will win.

National Mission

Since India began auctioning licenses through its National Solar Mission in 2010, developers including Leon Black’s Apollo Global Management LLC-backed Welspun Group and billionaire Vinod Khosla’s Sunborne Energy Holdings LLC have built 1,686 megawatts of solar capacity and cut average costs of photovoltaic power by about 51 percent. The program seeks to reduce solar power’s cost to the level of other forms of grid-supplied electricity by 2017.

India aims to add 9,000 more megawatts of solar by 2017. By around September, it expects to hold another auction to award 800 megawatts of photovoltaic capacity, Kapoor said.

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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