Even as the industry awaits official order on lifting the Approved List of Models and Manufacturers (ALMM) mandate for developers due to the lack of domestic solar module capacity, its role in delaying the enlistment of new models and manufacturers has been causing a supply bottleneck.

According to the updated ALMM, the total capacity listed is approximately 21 GW and includes 83 module manufacturers.

Delays Shutting Down Operations

The ALMM approval process requires manufacturers to deposit a hefty amount for each type of module produced. The enlistment fee is generally in the range of ₹200,000 (~$2,415) to ₹600,000 (~$7,245) for each module type and is determined based on the module wattage output and the total capacity of the manufacturing line.

The burden of fees is further exacerbated by the inordinate delays in approval that can extend up to five months.

The manufacturers awaiting approval cannot take any orders for the modules awaiting ALMM enlistment, which significantly impacts their business and prevents them from expanding.

Chetan Shah, Chairman, and Managing Director at Solex, a solar panel manufacturing company, said, “Currently, it is taking months for enlistment. There is no testing, as the BIS certification has to be done earlier, but still, it’s taking a long time. It should not take more than 20 to 25 days.”

He added that the delay is as good as suspending a manufacturer’s existing business operations.

Demand-Supply Gap

Manufacturers contend ALMM approval is redundant given the existing mechanism of Bureau of Indian Standards (BIS) certification. The process has only added to the demand-supply gap in the market.

“The enlistment process is taking months. The inspection part is taking long, creating a shortage of modules in the market. Also, developers have the stocks but are waiting for the enlistment, which is a major stumbling block. It has also affected the manufacturers’ expansion plans,” Pradeep Rishi, Head at Saatvik Green Energy, a module manufacturing company, said.

Ankit Kapadiya, Regional Manager, Lubi Electronics, a module manufacturer, suggested that the approval process favors the more prominent manufacturers. His unit is yet to get enlisted, even six months after the application for approval and paying the fees.

“I have the purchase order, but everything is stuck because of the delay in approval. This is not good for the domestic market. Our sales process is getting affected,” Kapadiya added.

However, some manufacturers find the ALMM approval process necessary to maintain quality in the market. They dispute the claim that the timeline for approvals is inordinately long.

Krishna Kadariya, Director at Patanjali Solar, a solar panel manufacturer, said, “It takes only a month for the enlistment process if you have proper documentation. This quality monitoring process is much needed for the domestic manufacturing segment.”

The government is mulling postponement of the ALMM mandate for two years as the domestic manufacturing capacity of 500 W+ modules is only about 10 GW for modules, while the project development pipeline is about 70 GW.

However, manufacturers say that if ALMM is lifted for two years, it will flood the market with cheaper Chinese modules, cutting the runway short for the sector poised to take flight.

Background

For government projects tendered after April 10, 2021, the government made it mandatory for developers to procure modules enlisted under ALMM.

Later, MNRE issued amendments to the ALMM order. As per the amendments, only the modules listed in the ALMM list would be eligible for use in utility-scale solar projects implemented by government agencies, government-assisted programs, open access, and net metering projects installed in the country.

Last October, MNRE clarified that open access and net metering renewable energy projects that applied for approval before October 1, 2022, would not come under the purview of the ALMM order.

The government intended to restrict imports, indirectly boosting demand for domestic modules. As the Union Minister of Power and New and Renewable Energy, R.K. Singh, said in an interview with Business Today, “I put up a total barrier, ALMM, under which no Chinese company has been listed, so they can’t export. I put up the barrier; at that time, NITI Aayog said it was a complete barrier. I said it was necessary…”

The ALMM program, devised to restrict imports, has unintentionally but effectively created a barrier for domestic module manufacturers and supply through delays. While the policies are well intended, the implementation and uncertainty are a deterrent for stakeholders.