Imposition of anti dumping duty on import of solar cells/ modules will increase project cost: ASSOCHAM

Implementation of the power purchase agreements (PPAs) signed recently for 2200 MW of solar power under different schemes of the central and state governments have come to standstill after the anti-dumping duty recommended by the Directorate General of Anti-Dumping and Allied Duties (DGAD) on import of solar cells/modules from China, US, Malaysia and Taiwan from US $ 0.11 to $ 0.81.

In a note submitted to the Finance Ministry by ASSOCHAM, it has stated if the anti-dumping duty was imposed, the project cost will increase by 18.83% on minimum side, while it may increase by 75% on maximum side.

The resultant corresponding revised tariff will be INR 9.1/kWh and INR 13.51/kWh respectively against INR 7.72. /KWHr in CERC award.

ASSOCHAM Secretary General D.S. Rawat said, if we consider another 17,000 MW to be installed to achieve, the proposed anti dumping duty implies increase in total project costs by almost Rs. 22,120 crore to Rs. 87,500 crore. This would also lead to similar cost hikes for the distribution companies or the government will have to bear this increase in cost of generation of power. This increase in cost of generation of power would ultimately imply increase in the cost of power to the public at large.

The proposed anti dumping duty (ADD) would increase costs all around, thus negating all the efforts made so far. Generation cost of power by developers is a pass through activity and ultimate impact comes to the power distribution companies (mostly govt. owned) and thereby on the energy consumers.

The PPAs signed for 2200 MW are 375 MW - SECI, under the JNNSM Phase II, Batch -I, 45 MW - Orissa State Policy, 100 MW - Chhattisgarh, 120 MW - Madhya Pradesh, 250 MW - Andhra Pradesh, 215 MW - Punjab, 100 MW - Karnataka, 130 MW - Uttar Pradesh, 690 MW - Tamilnadu, 100 MW - Rajasthan, 75 MW - Maharashtra.

Currently India has projects worth 2500 MW and the there are additional 2200 MW under implementation in various states of India under various schemes floated by the state and central government. This is a particularly exciting time for the industry as with the momentum build up through the last three years the Solar power tariff has reached a reasonable and rationalized level which is halved from the prevailing rates of Rs 16-17 per unit.

This was the major justification which allowed the State utilities to announce projects to meet their renewable purchase obligation (RPO) requirements hence expanding the solar power projects potential in India. With increasing affordability and expanding opportunities we are almost certain that the solar power is very close to achieving grid parity well before 2017.

However, the anti-dumping duty will have significant impact on the cost of solar power generation that will threaten to derail the growth momentum of the sector built up over the last three years and grossly undermine the investor confidence. Needless to say that the rising cost of solar power will seriously damage the key objectives of creating the foundations of energy security and efforts for ensuring electricity for all.

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