India’s first and largest tender for setting up solar manufacturing in the country is yet to conclude. Solar Energy Corporation of India (SECI) has yet not finalised the letter of authorisation (LoA) for the greenshoe option in the tender, which allows companies to build additional capacity.

After facing delays and extensions for about two years, the tender for solar manufacturing received bids in November, 2019. The government invited bids for 2,000 Mw of solar manufacturing and 6,000 Mw of linked solar power plant. This was oversubscribed by the industry.

Adani Green Energy submitted a bid for 1000 Mw manufacturing and 4,000 Mw power plant. Azure Power submitted for 500 Mw of manufacturing and 2,000 Mw power plant. Sources said both Adani and Azure quoted a tariff of Rs 2.9 per unit.

There was a greenshoe option for the bidders to increase the manufacturing and power generation capacity. Under this option, Adani offered additional capacity of 1,500 Mw solar cell and module manufacturing and 6,000 Mw generation. Azure quoted additional capacity of 500 Mw manufacturing and 2,000 Mw generation.

While Azure Power announced in December that it received LoA for primary capacity of 2 Gw of power generation, Adani is yet to make a public statement. At the same time, the board of SECI has also not approved the LoA for the greenshoe portion of the tender, said sources.

Citing secrecy of the tender process, SECI Managing Director J N Swain said the tender would be awarded shortly. “We are seeking some clarification. We have already awarded LoA for power generation, manufacturing part and capacity under greenshoe would be awarded soon,” he said.

Sector executives said the SECI board will take a decision to approve the greenshoe offer and also award it to the two winners. The delay in awarding the manufacturing project comes at a time when import of solar panels is facing slowdown because of protectionist measures by the Indian government.

To boost the domestic sector, the Indian government imposed safeguard duty on imported solar cells, modules and panels in 2018 for two years. The current duty is at 15 per cent and will expire in July. The tender for domestic manufacturing was also delayed during the same period.

This impacted the target for commissioning solar power projects as developers stalled imports, and didn’t translate into any benefit for the domestic industry.

For the financial year 2018-19 (FY19), the tendering target set by the ministry for new and renewable energy was 30,000 Mw. Ongoing tenders add up to 26,000 Mw and none have been closed yet, because of a lack of bids, said industry sources.

“Till June 2019, no one purchased panels as they were all fighting legal cases to pass through the increased cost because of safeguard duty. Now they are waiting for the safeguard duty to get over. The gap in procuring solar panels is showing on overall target. There is a deficit of 5-10 Gw in the projects slotted for this year,” said a senior executive of a leading solar manufacturing company.

In the past one-and-half years, imports of solar cells and modules reduced drastically. Imports of cells, pegged at $2.15 billion in FY19, have fallen to $1.26 billion in the current financial year till October. Cell imports peaked at $3.83 billion in FY18.

In the current year, of the 7,500 Mw target, 5,274.86 Mw has been commissioned, according to the website of the ministry of new and renewable energy.

On the export front, shipments from India have seen a slow rise in the current year, after slightly reducing in FY19. The domestic solar manufacturing industry in a petition asked the Centre to consider extending the duty beyond two years.