The Approved List of Models and Manufacturers (ALMM) regulation will be back in force from April 1, 2024, with exemptions for projects set up under open access solar and those in advanced stages of construction and rooftop solar projects with no subsidy.

Most stakeholders, however, have raised questions on the ambiguity around the definition of ‘advanced stages of construction,’ the phrase used by the Ministry of New and Renewable Energy (MNRE) in the notification reviving the ALMM mandate.

The MNRE has specified that the ALMM regulation will be relaxed for solar projects in advanced stages of construction that have placed module orders before March 31, 2024.

A senior executive from a public sector undertaking said, “We think advanced stages might mean where the balance of systems (BoS) work is complete and only about six months are pending for the project to be commissioned. But all this is very subjective at the moment, and if the government does not issue a clarification, we will have to take a call on a case-by-case basis.”

Most solar project developers that Mercom spoke to suggest that the advanced stages of construction would mean that land procurement is done, BoS is ready, module order is placed, and connectivity approvals are in place.

The ALMM notification has since been removed from the MNRE website. Stakeholders hope a new notification with more clarity will be issued.

A utility-scale solar project developer said, “The projects that are supposed to come online in 2024 are expected to have early commissioning. With the advanced stages clause, a lot of capacity additions are expected to come online this year. Developers must ensure that adequate power evacuation facility is available for this purpose.”

He feels that in case of delays in the signing of power sale agreements for such projects that are commissioned early, developers will have to plan short-term arrangements and supply power through power exchanges.

Another project developer felt that the ALMM implementation from April 1, 2024, would definitely impact projects where tariffs were quoted based on the imported module prices as compared to prices of locally procured ones.

He said, “We might see many projects approaching the regulators for a revision in prices.”

An India-based solar module manufacturer said, “There is uncertainty about the advanced stages clause. We are looking for a clarification from MNRE. Currently, the market is divided between domestic and overseas players, so the prices will be more competitive. Our company is focusing on venturing into the export market in the U.S. and other countries in Europe.”

The Open Access Exemption

According to Mercom India’s Q3 2023 Solar Open Access Market Report, as of September 2023, open access solar project installations constituted ~19% of the total large-scale projects in the country. The open access solar pipeline stood at over 12 GW at the end of the third quarter of 2023.

The exemption for open access solar has come as a relief for overseas module suppliers, with the March 31 deadline not far away.

A solar project developer believes that open access project developers, who have recently stocked on imported modules, would be looking to execute more captive projects.

He said, “This is definitely good news for open access solar projects as it will encourage more installations in the country by private parties. We did hope for the ALMM to be extended for one or two more years. The domestic module manufacturers in India have the option to export to a bigger market, such as the U.S., so they don’t have to settle for lower costs. We could have kept the ALMM exemption in place until there is sufficient manufacturing capacity available.”

With the government now encouraging more states to implement Green Energy Open Access Rules and the commercial and industrial (C&I) segment opting for the open access model to transition businesses to solar, the ALMM exemption is a big positive.

Unsubsidized Rooftop Solar Projects Exempted

The regulation will also exempt rooftop solar projects sans government subsidies. This will effectively exempt the C&I  segment rooftop solar installation from the ALMM mandate.

According to Mercom India’s Q3 2023 Rooftop Solar Market Report, the C&I rooftop solar installations constituted 68% of the total rooftop solar installations in the country.

With the central agencies now shifting focus to residential rooftop solar installations with various programs, C&I rooftop solar is expected to gain traction from private installers.

While the ALMM exemptions have definitely brought cheer to most sections of the industry, MNRE would do well to put their doubts to rest so that the implementation of the regulation is smooth.

“The ALMM reimposition has been announced in haste, without clear guidelines, which we expect to be rectified soon. If this policy is left to interpretation, as other policies have in the past, many projects will get bogged down with petitions and disputes. Hopefully, the government has meticulously thought through every detail in order to minimize disruptions and delays in installations and avoid potential shortages and price increases on the supply side,” said Raj Prabhu, CEO of Mercom Capital Group.