Closing In On The Deadline, Domestic Content Requirement Schemes Are Still Far Away From Their Targets
Domestic content requirement (DCR) mandates the use of both solar cells and modules manufactured domestically as per specifications and testing requirements fixed by the Ministry of New and Renewable Energy (MNRE). The DCR was incorporated into the Jawaharlal Nehru National Solar Mission (JNNSM) or National Solar Mission (NSM) adopted in 2010 with the objective of developing domestic solar manufacturing and making India a solar manufacturing hub. The NSM had an initial target of 20 GW of solar power by 2022 which was, in 2015, revised to 100 GW.
Schemes viz. CPSU, PM-KUSUM and grid-connected rooftop solar programme have DCR as a prerequisite, providing a guaranteed market with 36.8 GW direct demand for domestic PV (cells & modules).
Central Public Sector Undertaking (CPSU) scheme
The CPSU scheme was originally introduced in 2015 to implement 1GW of grid-connected solar PV power projects using domestic cells and modules, to be set up by CPSUs/ Government of India organisations with viability gap funding (VGF). Out of the targeted 12 GW capacity, 9.5 GW of aggregate capacity has been tendered by multiple authorities (SECI, NTPC, IREDA and APDCL). So far, 7 GW of the tendered capacity have been allotted, out of which, ~53% has been allotted to NTPC.
Grid-connected Rooftop Solar Programme
In December 2015, phase-1 of the programme was launched with the intent of providing incentives for residential, institutional and social segments. As for the government segment, achievement-linked incentives were provided. Phase-2 of the grid-connected rooftop solar programme was approved in February 2019 with a target of 40 GW of cumulative capacity from rooftop solar (RTS) projects by the year 2022. Within the ambit of phase-2, for the targeted 4 GW of residential solar rooftop capacity, financial assistance has been provisioned.
The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme was launched in 2019 and in FY2020-21, expanded to add a total solar capacity of 30.8 GW by 2022 from the initial target of 25.7 GW.
The scheme is divided into three components:
- Component A: Setting up of 10,000 MW of decentralised ground-mounted grid-connected solar or other renewable energy-based power plants
- Component B: Installation of 2 million standalone solar agriculture pumps
- Component C: Solarisation of 1.5 million existing grid-connected agriculture pumps
DCR mandate is applicable only for component B and C, paving way for aggregate demand creation of 20.8 GW.
Figure 1: Capacity Allotment Status under the DCR-mandated Schemes
Source: Relevant Tendering Authorities, JMK Research
Notwithstanding the huge demand (36.8 GW) opened up by the DCR category schemes, these have not made a significant impact in the Indian solar market as desired. The figure shown above does not show the installed capacities of various schemes which is negligible vis-à-vis the respective allotted capacities. The slow progress of DCR schemes can be primarily attributed to the availability (or lack) of DCR cells and the relatively higher cost associated with the same. However, with domestic cell capacity expected to increase by 8-9 GW by 2022 from the existing ~4 GW, the relevant concerns (i.e. demand-supply mismatch, expensive domestic PV products) of the industry may soon be alleviated.