Solar Goals Stymied in India as Investors Shun Chance to Build

(Bloomberg) -- India's effort to spur its own solar power equipment industry seems to be failing, with only one company so far bidding for the nation's tender to set up a factory.

The tender, which had already been downsized and delayed for months, received a single bid, from Azure Power Global Ltd., according to Anand Kumar, secretary at the Ministry of New & Renewable Energy. And the company planned to only build enough capacity to meet about one-fifth of what the Indian government is seeking, he said.

Azure Power officials didn't immediately reply to an email and phone call seeking comment.

The tender includes a requirement that the factory developer also build an associated solar power project that would sell electricity at fixed rate of 2.85 rupees (4 cents) per kilowatt-hour, which prospective developers have said is too low.

“What I am trying to do is to get the best rate for utilities, who should be the ultimate beneficiary,” Kumar said, adding that the government is trying to find out which rate is appropriate.

The lackluster response to the tender underscores the challenges faced by the South Asian nation to develop a domestic solar manufacturing industry. Global equipment makers, including China's Trina Solar Ltd. and Canadian Solar Inc., have been reluctant to build in the country because of record low solar power tariffs, as well as tender terms that include capped power prices, quick time frame to build the project and requirements to build a fully-integrated plant and solar farm.

The weak interest may also reflect that investors haven't been encouraged by the two-year safeguard duty on imports, initially set at 25 percent, that India has slapped on global competitors in a bid to kick start its domestic industry.

The deadline for the tender, for 3 gigawatts of manufacturing capacity and 10 gigawatts of solar projects, was originally in July. The single bid contrasts with the government's initial optimism after it was first floated, when SECI Managing Director J.N. Swain in June said nearly 50 foreign and domestic investors showed interest.

To contact the reporter on this story: Anindya Upadhyay in New Delhi at aupadhyay22@bloomberg.net

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Alpana Sarma

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