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One of the hotly discussed topics in the solar PV sector in India is the domestic content requirements for solar projects.

As things stand, MNRE is looking at having about 8000 MW of solar power plants (of the 100000 MW, or about 8%) of the total target by 2022 as coming from domestically made panels. Now, I am not sure if this 8000 MW is an officially announced target as I do not recall it seeing it in any official document, but I think this is what MNRE has been suggesting.

Whichever, let us say the government is looking at 10% in round figures  or about 10000 MW in DCR over next 7 years.

There appear to be different opinions on this number. The developers of course are happy as long as this number remains as low as possible.

The US, which has already dragged India India to the WTO on this, will also be happy as long as the DCR is kept minimal.

The guys who are clearly unhappy are the module manufacturers.

At even 10,000 MW by 2022, it is less than 2000 MW of domestic modules made compulsory every year. India has about 2000 MW of module capacity. That kind of evens out, but also means that there will be little incentive or gain for the incumbents to expand their capacities.

I have always batted for domestic manufacturing, even if means we impose artificial boundaries. I know my finance and economics friends think that is just pure bad thinking. They will say that the overall objective should be to bring down the cost of solar power, and anything that stands in the way should be eliminated. Which is why they always argue against imposing anti-dumping duties on Chinese panels, when it kind of appears (at least by what US and Europe are doing) that they are indeed dumping.

Sure, we do not wish to increase the cost of solar power. I still have a solution. Let our government, like the Chinese government, give the Indian module makers the best of terms to operate – low interest rates, capital subsidies perhaps for the time being until they achieve scale like their Chinese counterparts, and perhaps a few other financial incentives. By this, we keep the cost of solar power low, though we will need to rob Peter to pay Paul.

I am only saying robbing is worth it, if it is going to be for a period of 4-5 years, and if it is going to build a world class manufacturing infrastructure for solar PV in India.

The alternative is be at the mercy of Chinese solar panels – perhaps forever.

Check out: EAI Consulting for Solar Energy – Solar PV & Solar Thermal