The Ministry of New & Renewable Energy (MNRE) has exempted solar projects that will be commissioned by March 31, 2024, from the requirement of sourcing modules from the Approved Models and Manufacturers (ALMM) list.
The exemption was made due to the challenges that solar power developers face in procuring modules from domestic manufacturers. This move provides developers with the flexibility to source modules at the most cost-competitive rates.
ICRA analysts believe that the cost of imported modules, even after considering the basic customs duty (BCD), is still more competitive than modules sourced from domestic manufacturers using imported solar PV cells. To remain competitive, domestic manufacturers need to keep cell prices below 12 cents/watt, assuming that the current module prices remain constant.
While the capacity of domestic module manufacturing has increased, it is still heavily reliant on imports for sourcing solar PV cells due to a lack of backward integration and limited cell manufacturing capacity.
The exemption of ALMM requirements may negatively impact the order inflow for domestic manufacturers in the short term, but increased demand from export markets is likely to offset this, says ICRA analysts.