The latest memorandum issued by the Ministry of New and Renewable Energy (MNRE) stresses upon the importance of following BIS certification rather than Bloomberg Tier-I List when lenders are selecting solar projects to invest in. Government has highlighted this mandate as a way to protect domestic solar manufacturers from discrimination, as solar project lenders generally favour investing for projects that have used modules manufactured by Bloomberg Tier-I rated manufacturers. And only handful of Indian solar manufacturers (Vikram Solar, Tata, Adani, Waaree) claimed rank in the list, while majority of the rest are Chinese manufacturers.
Although, Government of India’s intent behind this new mandate seems beneficial for the industry, we need to have a closer inspection for derive an accurate opinion.
Certifications Can Help in Quality Improvement
India has spent $3.8 bn in 2018 for solar module import, and foreign (mainly Chinese) solar suppliers have claimed more than 80% of the domestic solar industry. In this scenario, investors only selecting projects that are using solar modules from Bloomberg Tier-I rated solar manufacturers gives advantage to foreign suppliers, which is not acceptable.
Import vs domestic solar equipment usage in India- (Image curtsey: DGTR)
Even though, Bloomberg Tier-I rated Indian solar manufacturers like Vikram Solar have IEC certification (Bureau of Indian Standard (BIS) certification follows performance test mechanism of IEC Standards), and stand to inspire other domestic manufacturers to strive for excellence, still Government of India’s mandate to enforce BIS certification should be welcomed as a supporting step for the majority of Indian manufacturers.
It is fact that focusing on solar module quality standardization through Bureau of Indian Standard (BIS) certification can help Indian solar sector grow with realized targets assuring energy security and expected performance. It can also help the domestic sector to easily attract investment from banks and gain more global market acceptance by satisfying quality standards.
However, internal issues relating to implementation of BIS certification have to be solved for this initiative to show positive results.
Issues Concerning BIS Certification
BIS certification guidelines were welcomed by the industry as it promised to standardise the quality of domestically manufactured module. However, nearly 1 year after the introduction of the policy, only 10-12 domestic and international players have received the BIS certification. The looming question is Why?
There are multiple reasons behind this scenario.
- Confusion revolving around guidelines issued by MNRE on BIS certification stands as one of the issues. As an example, we can point out that MNRE mandated to put nominal wattage inside the glass lamination. This stands as a problem as- it is not possible to get exact wattage of a module. It comes within a range (a module of 320 watt would offer 315 watt to 325 watt). Also as wattage can only be measured after the module is assembled (laminated), it is not possible to re-open it to put the wattage numbers inside. Additionally, there are chances of efficiency losses in case of putting rating levels inside lamination.
- Besides confusing surrounding a few directives within the policy, the certification process also takes nearly 3-6 months. This extensively long time frame leads to delays in sending modules to projects, thus barring manufacturers from bidding for projects.
- Additionally, lack of enough testing facilities within the country (currently there are 4 testing facilities in India- TUV, UL, National Institute of Solar Energy (NISE), and Hi Physix ) is leading to long queues of manufacturers to get certification. This is pushing domestic manufacturers out of the market and also causing delays in fulfilling project requirements.
- Lastly, the charges of testing and certifying solar modules (charges for every series of solar panel is ₹2.4 million) have also made solar manufacturers hesitant regarding BIS certification. Also, there is another mandate to repeat the test for even a minor change in BOM. This issues are piling up the expenses for domestic solar manufacturers, while delaying them to enter the into project bidding.
Intervention is Needed
Although, quality standardisation through BIS certification can show great results, investment and more effort is needed to solve issues. More testing lab establishment, simplification of laws, and relaxation of fees for testing are needed to protect the domestic industry.
It would be ideal for domestic solar manufacturers to attain both certifications (BIS and Bloomberg Tier-I). It would maintain India’s module quality and boost stakeholder confidence, leading Indian solar sector to grow. However, to see such a result, more focus on domestic manufacturing is needed.
Currently, the domestic manufacturing sector is facing multiple challenges. There is 25% safeguard duty on SEZ based solar manufacturers, there is differential GST levied upon solar, and frequent project cancellations (3.9 GW projects cancelled in recent months). These issues are dealing a damaging blow to the industry and limiting Indian solar growth. A larger policy framework is required to support manufacturing growth.
Losses of the Indian solar manufacturing industry- (Image Curtsey: DGTR)
New policies should be developed and implemented immediately that can address issue revolving around infrastructure, transport, taxation, power outages and labour laws. Indian solar industry has performed very well in recent years and with more investment, it can grow to support the country. However, imposing taxes and duties is not the way to go. More focus is needed in building R&D institutions, which our country clearly lacks.