Import fees will cool Modi’s solar ambition

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Natalie Obiko Pearson New Delhi

India’s government may strangle Prime Minister Narendra Modi’s efforts to reap more electricity from the sun should it impose duties on solar panel imports, as proposed by the nation’s previous administration.

Only a quarter of the 1.6 gigawatts of solar capacity in the works now would be finished if the levies were enacted, said Headway Solar, an industry consultant. The tax would double the cost of solar power, according to the Solar Power Developers’ Association.

The estimates are aimed at pushing Modi’s government away from backing a recommendation to impose the duty, which would protect India’s few solar cell producers from cheaper Chinese and US imports. Modi must balance the needs of manufacturers, led by Indosolar and Websol Energy System, against the interests of panel makers and developers that benefit from cheaper cells.

“It’s a nasty, poisoned gift from the outgoing administration to the incoming one,” said Tobias Engelmeier, the founder of consultancy Bridge to India Energy. He said everything from solar lanterns in rural villages to large grid-connected generators would become uneconomical. “It’s going to deflate the market terribly.”

Finance Minister Arun Jaitley, appointed by Modi, has until August 22 to implement the duties favoured by the Ministry of Commerce and Industry. Officials in charge of clean-energy policy oppose the tariffs but say there is little they can do.

“Our role is very limited as we can’t go to court against another ministry,” said Tarun Kapoor, the joint secretary in the Ministry of New and Renewable Energy.

India has built photovoltaic plants capable of powering more than 6 million homes since 2010, mostly using equipment imported from the US, China, Malaysia and Taiwan. Developers, led by Welspun Energy and Azure Power India, have used imported panels for 80 percent of that capacity.

Modi, who pioneered large-scale solar development in 2009 as chief minister of his home state, Gujarat, has vowed to harness solar power to reduce blackouts and ensure energy security. His party pledges to run everything from street lights and farm irrigation pumps to lightbulbs in every home by 2019 on the sun’s energy.

The commerce ministry recommended anti-dumping duties ranging from 11 US cents (R1.16) to 81c a watt on imports. That would double the price of solar power to 12 rupees (R2.15) a kilowatt-hour, said the Solar Power Developers’ Association.

Bridge to India calculated a smaller 10 percent escalation that would still kill many projects because they were won on thin margins in auctions, Engelmeier said. – Bloomberg


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