A Cabinet – Sponsored Gift for the Renewable Sector

The Union Cabinet approved the PLI (Production-Linked Incentive) programme for air conditioners (ACs) and high-efficiency solar PV modules on Wednesday, according to Commerce Minister Piyush Goyal, who spoke to the media on cabinet decisions.

“The government, led by Prime Minister @NarendraModi Ji, has approved the PLI plan for air conditioners and LED lights in order to make Indian manufacturing more competitive worldwide. India’s economic narrative will be spearheaded by its flagship PLI Scheme, which will promote domestic industrial capabilities and employment growth” Goyal also took to Twitter.

Because the local manufacturing sector has limited operational capabilities of solar PV cells and modules, solar capacity expansion currently relies heavily on imported solar PV cells and modules. The plan will minimise reliance on imports in a critical area such as energy. It will also contribute to the Atmanirbhar Bharat project.

Solar PV manufacturers will be chosen through a competitive bidding procedure that is open to the public. PLI will be paid out for a period of five years following the commissioning of solar PV manufacturing plants, based on sales of high-efficiency solar PV modules.

Background

India has set an ambitious goal of establishing 1,75,000 MW of renewable energy generation by 2022 and 4,50,000 MW by 2030. Based on techno-economic research, the Central Electricity Authority (CEA) said in its Optimum Energy Mix study that 2,80,000 MW capacity from solar is feasible by 2029-30, energy will be required. To meet the objective, approximately 25,000 MW of solar energy capacity will be required is required to be built each year until 2030. Currently, solar capacity expansion is heavily reliant on since the domestic manufacturing industry has relied on imported solar PV cells and modules Solar PV cells have a restricted operating yearly capacity of about 2,500 MW while wind turbines have limited operational annual capabilities of 9,000-10,000 MW in the case of solar PV modules.

What is PLI Scheme?

The Production Linked Incentive Scheme (PLI) for Large Spectrum Electronics Production provides a monetary incentive to enhance domestic manufacturing and attract significant investments in the electronics value chain, which includes mobile phones, electronic components, and ATMP devices.

“Preference should be given to companies who establish larger capacity plants.” However, in order to qualify for the auction, the applicant manufacturer must commit to establishing a production unit with a minimum capacity of 1,000 MW,” the ministry stated.

What is the aim behind this move?

To encourage the manufacture of high-efficiency solar PV modules in India, therefore reducing reliance on imports in the field of renewable energy.

• The PLI plan, which aims to enhance domestic manufacturing in the country, is a central government effort aimed at making the indigenous sector globally competitive and producing high-value export-oriented goods.
• The Union Cabinet approved a programme to boost processed food production last week, at a cost of Rs 10,900 crore to the exchequer for the next six years.

The objectives of the PLI Scheme include: 

• To increase solar PV module production capacity for high-efficiency modules.

• Bringing cutting-edge technology to India for the production of high-efficiency modules. The system will be technology-neutral, allowing any technologies. However, innovations that result in improved module performance will be rewarded.
• To encourage the establishment of integrated plants in order to improve quality control and competitiveness.
• To create an ecosystem for the sourcing of local materials in the solar manufacturing industry.
• Job creation and technical self-sufficiency

According to the official press release, “The primary goal of the PLI programme is to make Indian manufacturing globally competitive by removing sectoral barriers, establishing economies of scale, and assuring efficiency. It is intended to build a full component ecosystem in India and to integrate India into global supply chains. The programme is anticipated to attract worldwide investments, provide large-scale job opportunities, and significantly boost exports.”

THEY ARE UP WITH A COMPLETE PLAN

• The government had already approved Rs 15,000 crore in incentives for local pharmaceutical manufacture, as well as Rs 7,350 crore for domestic production of tablet computers, laptops, all-in-one personal computers, and servers.
• The federal government is implementing 13 PLI schemes in all, including those for white goods, cars, textiles, IT hardware, and chemical cells.
• The PLI Scheme is expected to result in an additional investment of 7,920 crores, incremental production of 1,68,000 crores, and exports of 64,400 crores during a five-year period. It would also provide four lakh direct and indirect job opportunities.

Guidelines for the PLI Scheme for Solar Modules have been issued; IREDA will be the implementing agency.

• The project also intends to promote the establishment of integrated facilities for improved quality control and competitiveness, to create an ecosystem for the procurement of local materials in solar manufacturing, to create jobs, and to reduce import reliance.
• The rules also stated that greenfield new solar PV module manufacturing facilities will be eligible for PLI, and brownfield projects would be permitted to participate as well.
• It went on to say that while a manufacturer can bid for any megawatt capacity, the maximum capacity that can be awarded to one bidder under the PLI scheme is 50% of the bid capacity or 2,000 MW, whichever is less, in order to accommodate at least three manufacturers within the overall envelope of Rs 4,500 crore.
• The rules further stated that manufacturing facilities sanctioned under the project would indeed be eligible for PLI on annual sales of high-efficiency solar PV modules for 5 years from commencement or five years from the anticipated commencement date.

The MNRE has released instructions for implementing the PLI programme for high-efficiency solar PV modules. In a ministry-wide notification, the Ministry of New and Renewable Energy (MNRE) announced the President’s approval for the implementation of the Production Linked Incentive (PLI) scheme “Way Of enhancing on High-Efficiency Solar PV Modules” to achieve Gigawatt (GW) scale manufacturing capacity in high-efficiency solar PV modules. With the approval, the Ministry also released the Regulations for the Scheme’s operation.

Implementing Agency Words:

MNRE will execute the PLI programme through the Indian Renewable Energy Development Agency (IREDA) as the Implementing Agency. IREDA will be responsible for secretarial, managerial, and implementation assistance, as well as other duties as allocated by MNRE from time to time.

IREDA’s responsibilities include, among other things, receipt of applications, examination, and appraisal of applications in accordance with the modalities of this scheme, issuing acknowledgments to applicants, making appropriate recommendations to MNRE after assigning ranking for approval of beneficiaries, examination of claims of beneficiaries for PLI disbursement, and verification and reconciliation of monies.

Through site visits, IREDA will have the authority to conduct physical inspections of an applicant’s production units and offices. The National Institute of Solar Energy (NISE) will be consulted for module efficiency and temperature coefficient measurements. MNRE may additionally nominate National Accreditation Board for Testing and Calibration Laboratories (NABL) approved labs, etc. for such measurements if necessary.

Who Are Eligible?

Beneficiaries of the PLI programme will be chosen through a transparent bidding procedure, according to the criteria.

Applications will be shortlisted based on the following criteria:

1. The extent of integration: Preference will be given to manufacturers who propose to set up a fully integrated solar PV manufacturing plant using silicon-based technology (from polysilicon manufacturing to ingot/wafer manufacturing to solar cell and module manufacturing) or fully integrated Thin Film technology or any other technology. However, in order to be considered for the bid, the applicant manufacturer must guarantee minimal integration between solar cells and modules.
2. Manufacturing Capacity: Manufacturers with larger capacity plants will be given preference. However, in order to qualify for the bid, the applicant manufacturer must commit to establishing a production plant with a minimum capacity of 1,000 MW (1,000 MW for each individual step included in the company’s proposal).
3. Module performance requirements: Manufacturers will also be required to meet the following minimum performance criteria:

• Minimal module efficiency of 19.50% with a temperature coefficient of Pmax more than -0.30% per degree Celsius,
•  or minimum module efficiency of 20% with a temperature coefficient of Pmax equal to or greater than – 0.40 percent per degree Celsius.

Management of the PLI system and the ability to eliminate obstacles:

1. As authorised by the Cabinet on November 11th, 2020, the Empowered Group of Secretaries (EGoS) chairmanship by the Cabinet Secretary will supervise the PLI plan, conduct periodic reviews of the scheme’s outlay, ensure uniformity of all PLI Schemes, and take appropriate steps to ensure that the expenditure stays within the prescribed outlay.
   Any adjustments to the scheme’s modalities that are necessary, subject to the total budgetary expenditure being within 4500 crores, would be submitted to the EGoS for consideration.
2. Any modifications to the scheme rules that do not affect the modalities that must be submitted to EGOS as indicated above would be done with the permission of the Hon’ble Minister (New & Renewable Energy), subject to the overall financial expenditure remaining within 4500 crores.

How do Experts perceive This Scheme?

Gyanesh Chaudhary, MD, Vikram Solar, commented on the latest guidelines for the production-linked incentive (PLI) scheme, saying, “Vikram Solar welcomes the MNRE’s latest guidelines for the manufacturing incentive (PLI) scheme, which is a great and decisive factor in making India “Aatmanirbhar.”

We have great aspirations for the PLI plan as a local solar manufacturer since it promises to boost solar production in the country. This would address the energy problem, create employment, boost investment, and bring technical innovation to the industry. It would also assist India in meeting the Paris Agreement’s Renewable Energy target well inside the timeframe.

“The PLI plan for the solar sector has been allocated Rs 4,500 crore, and recipients will be chosen through a fair bidding procedure. Manufacturers will be rewarded under this plan for greater solar PV module efficiencies as well as for obtaining raw materials from the local market. This would encourage additional investment in the Indian solar industry, and I am hopeful that the government will give the second tranche of PLI for solar producers. As a result, there is a need to build a full ecosystem for India’s solar business. The unveiling of PLI will usher in the next chapter of the Indian manufacturing narrative for good!” he added.

SUMMARY

On Wednesday, the Cabinet approved two production-linked incentive programmes (PLI) totalling Rs 10,738 crore. PLIs have been examined for high-efficiency solar PV modules, LED, and air conditioners, according to a cabinet briefing by Union Ministers Prakash Javadekar and Piyush Goyal. A PLI of 6,238 has been authorised for LED and air conditioners, while a PLI of 4,500 crores has been allowed for high-efficiency solar PV modules.

The PLI Scheme is expected to generate Rs. 7,920 crore in incremental investment, Rs. 1,68,000 crore in incremental production, Rs. 64,400 crore in exports, Rs. 49,300 crore in direct and indirect revenues, and an extra four lakh direct and indirect job opportunities during a five-year period.

The Cabinet also authorised an Rs.4,500 crore budget for the execution of the PLI Scheme for High-Efficiency Solar PV Modules.

It is a wonderful moment for all the small and large companies engaged with renewable energy products. The government is providing them with a once-in-a-lifetime chance to scale up their production with robust benefits packed in a deal. It will not only be economically beneficial for the development of our nation but also an environmentally sound project. Economists and Environmentalists hailed their support for this attractive scheme. It will be interesting to wait for the best results.

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