New Solar PLI Scheme Changes

Details on the new solar PLI scheme for the Rs 19,500 crores that was announced in the budget are still to come out formally. With a first PLI scheme that had a corpus of ‘just’ Rs 4,500 already having been concluded, it’s fair to expect some quick movement with part 2 now.

However, reports and speculation have been swirling around over the changes the new PLI scheme will have, considering its much larger corpus. There was talk of distributing the new corpus on the many major firms that had missed out in the first round, which was quickly trashed by Power Minister R.K. Singh, who made it clear that fresh bids would be called for.

Now, we are told by industry insiders close to the MNRE that the new PLI scheme, being much larger, will have an enhanced limit of 10 GW, and will be open to previous bid winners too. That would seem to set the stage for a second run for both Reliance New Energy and the Adani Group, both of whom have announced plans much larger in scale than almost anyone else in India when it comes to the solar supply chain.

In a move to support smaller firms linked to the solar value chain, the minimum Local Value Addition (LVA) or use of local content for the participating manufacturers is likely to be at 90 per cent. That will mean the co-development of smaller suppliers, and more jobs. manufacturing of backsheets, encapsulants, frames, structures and electricals will all get a push. Overall, the focus will remain on backwar integration, especially for polysilicon and wafers, as just module manufacturing has been termed ‘not enough value addition’ by ministry officials.

The current winners from the PLI round conducted by IREDA are Reliance New Energy Solar, Adani Infrastructure and Shirdi Sai. The fourth winner, Jindal India Solar Energy opted out after a winning bid.

It is clear that all three existing winners will want to participate, considering the over 4x enhancement in scheme size now. They will have to contend with the 10 GW cap, after taking into account the previous bid corpus they have been allotted. Notable players like the Tatas, through Tata Power remain non-committal, stressing that manufacturing is a very long term commitment, and they will expand their plans at a time of their own choosing, and not just for short term incentives.

With a strong 2021 in capacity creation, and even higher roadmap for the coming decade, expect the bidders who missed out, as well as some new bidders to make a pitch this time, as make in India becomes the mantra in solar.