Cell Shortage Forces Timeline Extension by MNRE For CPSU Phase II Solar

As predicted by many Industry experts, domestic cell production has failed to keep up with demand for various central schemes that mandate local sourcing.

Now the Ministry of New And Renewable Energy (MNRE) has stepped in to provide and extension to projects under tranche I and II of the CPSU Phase II scheme. The MNRE was responding to repeated communications from the Solar Energy Corporation of India (SECI). The CPSU scheme is targeting 12000 MW of solar additions through Central government Public Sector Undertakings (PSU’s). The scheme has already seen a few changes, notably a mandate to a few select PSU’s to push it, rather than leave it to individual PSU’s.

SECI made its case based on what has been described as a ‘temporary’ shortage of equipment for solar PV power projects, particularly domestically manufactured solar PV cells. The interactions of the Ministry with industry stakeholders also convinced officials that the addition of new domestic manufacturing capacity of solar cells has been delayed due to COVID-19 related travel restrictions. Currently, India is estimated to have cell manufacturing capacity of only 3 GW, as compared to module manufacturing capacity of 15 GW. That is one reason the two have been treated separately when it comes to protection from imports, with cells usually facing lower tariff barriers.

The new commissioning period has been enhanced from present 24 (twenty four) months to 30 (thirty) months from the date of letter of award (LoA). Further, the timeline for the intermediate milestone of “Award of EPC Contract’, which was 6 (six) months from LoA, in Tranche-I & Tranche-II, has also been increased to 12 (twelve) months from the date of LoA.

Thus, in accordance with these new timelines, for projects under Tranche I & Il, government producers who had awarded the EPC contract within 6 (six) months from the date of issuance of LoA by SECI, shall increase the time period for project execution by EPC contractor such that the total project timeline is 30 (thirty) months
from the date of LoA by SECI.

Projects where the award of EPC contract happened beyond 6 (six) months but within 12 (twelve) months of LoA by SECI, such delay is regularised and the Government Producers shall keep the time period for project execution by EPC contractor such that the total project timeline is 30 (thirty) months from the date of LoA by SECI.

In cases where the EPC contract has not been awarded even within 12 (twelve) months of issuance of LoA, SECI may carefully assess the readiness of the project for commissioning within 30 (thirty) months of LoA, and based on that decide on giving more time for award of EPC contract, subject to the payment of applicable penalties by such Government Producers. The overall project completion timeline in such cases will stay at 30 (thirty) months. All other projects are to be cancelled and such organisations can apply afresh or participate in future CPSU Scheme tenders.
MNRE’s notice clarifies that these  timelines are excluding the extension(s) given on account of COVID-19,
including the 5 (five) months blanket extension already given by MNRE.

We have highlighted earlier on how domestic production of solar cells is a particularly major issue, and bound to impact execution of most schemes that mandate domestic content requirements, be it the CPSU scheme or even the PM KUSUM scheme. You can view the full notice here.