DOMESTIC CONTENT REQUIREMENTS AND INDIA’S NATIONAL SOLAR

MISSION Meera Fickling ECODIT, LLC June 26, 2014

INDIA’S SOLAR PROGRAM

•  JNNSM: launched in 2010 under National Action Plan on Climate Change. •  1.1 GW of grid connected

PV, 0.2 GW of off grid by 2013.

•  20 GW of grid connected PV, 2 GW of off grid by 2022.

INDIA’S SOLAR PROGRAM

•  Phase I: Reverse auction mechanism •  Solar developers submit bids to

government •  Government selects lowest

bids •  Government purchases power

•  Two auctions under Phase I: •  Batch I: PPAs signed in 2011 •  Batch II: PPAs signed in 2012

•  One auction so far under Phase II: •  PPAs signed in 2014

THE SOLAR PV MANUFACTURING CHAIN

THE PHASE I LCR

•  Crystalline silicon panels required to be sourced domestically.

•  Thin film panels exempt from the requirement.

0.5

0.7

0.9

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1.3

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1.9

2.1

1/2

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2010

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2011

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2012

CSi vs Thin Film Module Spot Prices, Adjusted for BOS Penalty, 2010-2012

Pvinsights CSi Multi Module Spot $/watt - Average

PVinsights Thin Film Module Spot $/watt + BOS Penalty

Globally, only 11 percent of PV deployment is in thin film; 89 percent is in Csi.

Under the JNNSM, over 60 percent of capacity subsidized under Phase I was in thin film.

Gujarat vs. Rajasthan

    Projects  Financed  2011-­‐2012       JNNSM  

Projects  Non-­‐JNNSM  Projects  >  

5  MW  Gujarat   0   59            North  Gujarat   0   2  

Rajasthan   52   2  

PERCENT MARKET SHARE: FOREIGN CSI, FOREIGN THIN FILM, DOMESTIC

   

Rajasthan   Gujarat  

Foreign  CSi   0   30  

Foreign  Thin  Film   62   38  

Domes?c  CSi   38   33  

PHASE II: POLICY ADJUSTMENTS

•  Viability Gap Funding (VGF) •  Total 750 MW in Batch I •  Two separate auctions: •  375 MW is open; no LCR •  375 MW has technology-

neutral LCR

•  Imported thin film now at a disadvantage •  US has requested a

dispute settlement panel in WTO

PHASE II LCR’S IMPACT ON THE COST OF SUBSIDIZING SOLAR GENERATION

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5

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Via

bili

ty G

ap

Fun

din

g (

VG

F),

Mill

ions

of R

upe

es

MW

True Supply

Supply with LCR

SUMMARY

•  Phase I LCR: •  A failure for Indian

manufacturing: No significant additional domestic market share.

•  A win for foreign thin film manufacturers: mean estimate of 24% increase in thin film market share.

•  Phase II LCR: •  50% increase in subsidy at the

margin relative to a non-LCR scenario.