Parliamentary committee questions low bids, project quality in solar sector

Recommends high dumping duty on imports, support to domestic industry

As tariffs in the solar power sector touch record lows, a Parliamentary Standing Committee on Energy has raised apprehensions over the quality of equipment used in these projects. At the same time, it has recommended a high anti-dumping duty on low-quality imports and a financial push for the domestic solar manufacturing industry.

"The Committee notes that in a rush to build market share in this sector, some players have become aggressive in competitive auction and are bidding at very low tariff. The Committee is apprehensive about the quality of the material used. We are of the view that some of these projects would become unviable because the developers may find it difficult to raise funds and contain high project costs and such a low tariff would also affect the viability of those solar projects which have been awarded earlier at a higher rate," said the Committee’s report.

Asking the ministry of new and renewable energy to ensure that some outlying bids do not disturb the market's dynamics, the Committee has suggested a high anti-dumping duty or duty based on the efficiency of the material imported for solar power plants.

Recently, Business Standard reported that the Centre is looking at ways to restrict the influx of low-quality cheap solar panels. The government is designing standards for solar panels that, in turn, would also help it identify approved domestic and overseas suppliers.

While the Committee has asked the government to take another look at its subsidy programmes, it has also recommended it to take a more proactive role in providing access to loans and arranging finances from global funds for the sector.

"The Committee are of the view that Viability Gap Funding (VGF) Scheme has outlived its utility. The scheme had relevance when the quoted solar tariff was above Rs 4.43/per unit. Now, in view of the dwindling solar tariff, the Committee do not find any rationale behind continuation of this scheme," it said.

The report further questioned the VGF extended to central public sector units (PSUs), such as NTPC, ONGC, BHEL, and Coal India, among others, and asked the ministry to reconsider it. The Committee also expressed concerns over the slow progress of solar capacity addition by these PSUs.

Of the 175 Gw of solar capacity addition target by 2022, 40 Gw is to be met through rooftop solar. The Committee has called this target unrealistic. "It is highly unlikely that this target will be achieved. The Committee are of the view that the Ministry should give this scheme a serious relook, otherwise, it will derail the target achievement of the National Solar Mission," said the report.

The report was chaired by Dr Virendra Kumar and was tabled in both houses of the Parliament on July 31, 2017.