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US firms to bid for auctioned India solar power projects as import dispute deepens

First Solar among US firms to bid for solar projects in first India auction since 2011 as dispute over locally-made PV equipment continues

India sun
Current tender for the solar power projects in India has received bids for more than double the capacity available

US firms are set to bid for auctioned PV projects to build solar power plants in India as a trade dispute with the Western country over import curbs continues. The companies will bid in India’s first national solar power auction since 2011, this month, while the US dispute deepens over India stating half of solar power capacity being auctioned must be built with locally-made equipment.

First Solar, the biggest solar panel manufacturer in the US, and ReNew Power Ventures Pvt, which is backed by US multinational investment banking firm Goldman Sachs Group, and are among 68 bidders across the solar power industry vying for projects, according to reports. The winners for the 750MW being auctioned will be announced at the end of this month.

In order to help local solar module makers, India is requiring half the capacity being auctioned to be built with locally-made equipment. This is 375MW, equivalent to about 10 per cent of the total capacity India has offered in the past year. But the US has said this rule unlawfully restricts access to US manufacturers, such as First Solar, Bloomberg reports.

Inbound PV shipment

According to data from the Ministry of Commerce, the growth of India’s solar power industry has boosted inbound shipment of PV components being shipped into the BRIC country. Value of purchases has reached USD 2.4bn since 2010 when India’s solar program started. The US has this week lodged a complaint with the World Trade Organisation (WTO) against India’s “unfair barrier to US exports.” India is disputing the complaint, Bloomberg said.

India’s first national solar auction, three years ago, drew scepticism with record-low bids, Bloomberg said. Companies at the time said banks wouldn’t loan to solar power projects because they were deemed too risky. The current tender, including from US firms, has received bids for more than double the capacity available.

Drawing solar investment

India plans a sixfold increase in solar power capacity, which could draw USD 11.7bn of investment by 2017, Bloomberg reports. In contrast, banks are slowing lending to coal and gas-fired projects as a result of a squeeze on fuel in the BRIC country.

“The advantage of renewables is that you know that the cost is going to be forever,” said Sumant Sinha, chief executive officer of ReNew Power, Bloomberg reports. “You lock in the price today. You’re not impacted by the rupee’s depreciation. There’s no fuel risk.”