Solar PLI Scheme To Benefit 8-13 % Of Incremental Panels Demand Till FY30: Ind-Ra


India Ratings and Research (Ind-Ra) estimates the allocation of INR 45 billion towards the solar modules manufacturing industry by the Ministry of New and Renewable Energy (MNRE) can benefit the sales of 20 GW from the capacity developed under the under production linked incentive (PLI) scheme across the five-year implementation period, assuming 100% localisation (up to 30 GW in case of 65% localisation).

It also means sanction of the PLI facility which will benefit 4-6 GW of sales annually over five years from commissioning of the beneficiary manufacturing facilities. The scheme can facilitate additional 8-12 GW annual solar cell/module manufacturing capacity in India. Sales up to 50% of the manufacturing capacity set up by the winning bidder will benefit from PLI. This estimate assumes the base PLI rate of INR 2.25 per watt power and entirely greenfield expansion.

The PLI benefit will be calculated based on the actual sales volume, PLI rate, tapering factor (starting with 1.4x in first year and reducing to 0.6x in the fifth year) and the level of localisation. incentivising bidders to opt for high efficiency modules while bidding. The PLI rate will defer with the efficiency and temperature gradient quotient claimed at the time of bidding and will vary between INR2.25 and 3.75 per watt power, benefitting players to invest in better technology. Also, more benefit will be available with increased localisation of raw materials. However, the bidders will in no case be eligible for any PLI over and above the requirement quoted by them for a particular year. Bidders will be selected based on a pointer system based grading for the extent of backward integration and manufacturing capacity.

Also, the scheme could lead to more sector consolidation (from the current 15-20 players with significant capacities) to benefit from the economies of scale and requirement of minimum capacity to benefit from the scheme. But on the flip side, given the strict timelines for implementation, the scheme may lose out on its intended purpose for the level of backward integration. All in all, this a good start, but timely disbursements, ease of processes and scaling up the scheme amount will be key things to look out for over short to medium tenure to see India self-reliant and simultaneously being economically viable to meet its solar power ambitions.

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