Centre Orders Renewable Energy Agencies to Cancel Hasty Solar Tenders

India's renewable energy ministry has issued a directive to clean energy agencies, ordering them to cancel and reissue tenders for government projects that were hurriedly submitted. According to a circular posted on the ministry's website, some agencies provided companies with only seven days to submit bids, potentially to avoid a rule requiring the use of domestically produced solar cells and modules.

Most Indian companies currently rely on cheaper China-made solar cells. However, starting from June 1, 2024, India's clean energy policy mandates that developers of government projects use only locally manufactured modules and cells. This rule is part of the government's broader strategy to promote domestic manufacturing and reduce dependency on foreign components.

Renewable energy agencies act as intermediaries between the government and private players, issuing tenders for projects. Once these projects are constructed, the electricity generated is sold to state power utilities. The ministry's circular does not specify which agencies were involved or the values of the projects in question, but it emphasizes the need for compliance with the new rules.

The short window provided for bid submission may have been a tactic to circumvent the requirement to use domestic solar cells. The ministry has given the agencies 15 days to report back on the actions taken to cancel and reissue the tenders.

India aims to become largely self-sufficient in solar cells by March 2027, but effective production could be lower in the initial quarters, according to a research note by SBI Caps in August. This timeline underscores the government's commitment to fostering a robust domestic solar manufacturing industry, which is crucial for achieving energy security and reducing carbon emissions.

The government's push for local manufacturing is part of a broader initiative to boost the renewable energy sector and meet the country's ambitious targets for renewable energy capacity. By ensuring that government projects use locally produced components, the government hopes to stimulate investment in the domestic solar industry, create jobs, and enhance the country's energy resilience.

The circular from the renewable energy ministry is a significant step towards achieving these goals. It sends a clear message to all stakeholders that compliance with the new rules is non-negotiable and that the government is committed to a transparent and fair tendering process.