Govt to subsidise Solar Power Projects for Railways and Army

Govt to subsidise Solar Power Projects for Railways and Army

New Delhi:  The Indian government has devised a plan to promote domestic solar photovoltaic module manufacturers even as it recently dropped the proposal to levy anti-dumping duties on imported modules.

The Indian government plans to take advantage of some specific clauses in the WTO agreements to subsidise solar power projects by the army, railways and public sector enterprises. As per the plan drawn up by the government, the Indian army and public sector companies will set up 1,000 MW solar PV projects each.

The government will offer INR 1 crore viability cost funding for each MW of capacity. The condition for this funding is that this entire capacity would use Indian-made solar cells, modules and inverters. Projects using Indian-made modules and inverters only will get funding of INR 50 lakhs per MW.

The government is looking at the country’s power producer, NTPC Limited, to take the lead among the public sector enterprises. The company already owns a number of solar power projects and is planning to set up some large-scale solar power projects with capacity of up to 1,000 MW. NHPC Limited, the largest hydropower generator in the country, may also set up some projects.

The US government had challenged Indian regulations that require some projects to use domestically manufactured solar power equipment. Sources within the Indian government claim that the new scheme is WTO compliant. Governments are allowed to procure domestic equipment for defence purposes and for its own use, thus the use of Indian-made solar power equipment by the army and public sector companies is justified, the sources claim.

With such bold plans, the Indian government has also asked the cell and module manufacturers to operate their production lines at full capacity and even add more production capacities. BHEL, another state-owned company and the largest power equipment manufacturer in India, has plans to set up solar cell and module manufacturing facility.

If the army and the railways are able to install significant solar power capacity, it would reduce substantial financial burden from the 2 institutions as both are heavy consumers of electricity. Railways, which pay some of the highest electricity tariffs among all consumer groups, will have their own power generation capacity.

NTPC will be able to bundle solar power with coal based power, which will allow distribution companies to meet their power demand and fulfill renewable purchase obligation through a single power purchase agreement.