National Solar Federation Says Domestic Content Requirement May Hurt KUSUM Program

Industry stakeholders have unanimously opposed the clause allowing only manufacturers to participate

September 17, 2019

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The National Solar Energy Federation of India (NSEFI) in a consultative session with industry stakeholders held last week, has expressed its concerns regarding the domestic content requirement (DCR) being mandated for the KUSUM program.

The KUSUM program is expected to help Indian farmers by providing them financial and water security through the mobilization of solar projects and solar-powered water pumps. The program mandates the use of India-manufactured cells and modules for the planned 25.75 GW of solar capacity to be deployed by 2022.

The program has been divided into three components:

In the session, NSEFI stated that the DCR component B and C could pose challenges in terms of implementation of the program while the determination of feed in tariff (FIT) by state regulatory commissions through distribution companies may end up being a “non-starter” for component A. Further, industry stakeholders have unanimously opposed the clause allowing only manufacturers to participate.

NSEFI Chairman Pranav R. Mehta said that “It is beyond any reasonable doubt that KUSUM, when implemented successfully in its true spirit, will be a great game changer for the country.” However, he added that “there are a few impediments in the implementation of the program and it is imperative that we address it for a successful implementation of the scheme.”

This is not the first time that an industry body has raised concerns regarding the DCR component of the KUSUM program. Last month, the Solar Energy Equipment Manufacturers Association of Telangana (SEEMAT) wrote to the Minister of Power R.K. Singh requesting the withdrawal of “the irrational and impractical decision of mandatory usage of the indigenous solar cells in the KUSUM program”.

In this case, NSEFI also brought up the concerns regarding metering facility available and its impact on grid-connected solar pumps. According to NSEFI, the payment mechanism prescribed for component A of the scheme might need to be revisited to facilitate a smooth transfer of benefits to the farmer.

Further, NSEFI expressed that the program should focus on promoting efficient irrigation techniques combined with off-grid and on-grid solar pumps. However, NSEFI also looked for clarity from the MNRE with respect to the disbursement mechanism from DISCOMs to developers in component A and developers in component B and C.

However, recently, in a letter addressed to the Ministry of New and Renewable Energy’s (MNRE), the Indian Solar Manufacturers Association (ISMA), expressed its support to the government’s decision to utilize indigenous cells and modules in the implementation of the KUSUM program.

Image credit: NSEFI

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