The Ministry of New & Renewable Energy (MNRE) has approved ₹195 billion (~$2.61 billion) to achieve gigawatt-scale manufacturing of high-efficiency solar photovoltaic modules under the second phase (Tranche II) of the Production Linked Incentive (PLI) program.

Out of the total approved amount, ₹120 billion (~$1.47 billion) has been set aside for vertical integration of manufacturing polysilicon, ingots, wafers, solar cells, and solar modules under the second phase (Tranche II) of the Production Linked Incentive (PLI) program.

For vertical integration of manufacturing wafers, solar cells, and solar modules, ₹45 billion (~$550 million) has been approved, and for solar cells and solar modules ₹30 billion (~$370 million).

Implementing agency

The Solar Energy Corporation of India (SECI) will be the implementing agency for the program. Its responsibilities will include receipt and appraisal of applications, issuing letters of award, examination of beneficiaries’ claims for disbursement of PLI, verification of disbursement claims, a compilation of progress data, and quarterly review of the performance of the program.

SECI will also submit the progress to MNRE every quarter along with details of disbursement claims received for PLI, the amount disbursed, reasons for the delay in disbursement of the incentives, etc. SECI will be eligible to get 0.50% of the PLI amount disbursed as administrative charges annually.

The Union Cabinet recently approved the MNRE’s proposal for Tranche II of the PLI program. In April 2021, the government approved the implementation of the PLI program with an outlay of ₹45 billion (~$605 million), which then increased to ₹195 billion (~$2.61 billion) in the 2022 budget.

Extent of integration

To qualify for bids under the program, applicants must commit to minimum integration across solar cells and modules. Based upon the extent of integration proposed, bidders can opt for bidding for one of the three baskets.

Basket one is for vertical integration of manufacturing polysilicon, ingots, wafers, solar cells, and solar modules or fully integrated manufacturing of thin film facility or fully integrated facility of any other technology.

Basket two is for vertical integration of manufacturing wafers, solar cells, and solar modules or fully integrated manufacturing of thin film facility or fully integrated facility of any other technology.

Basket three is for vertical integration of manufacturing solar cells and solar modules or fully integrated manufacturing of thin film facility or fully integrated facility of any other technology.

Manufacturing capacity

Applicants must set up a manufacturing facility with a minimum of 1 GW capacity. The maximum capacity that can be bid for, i.e., the manufacturing capacity that a bidder will set up, will be 10 GW for polysilicon + wafer + cells + modules and 6 GW each for wafer + cells + modules and cells + modules categories.

However, the maximum capacity awarded to one bidder will be 50% of the capacity set up by the applicant. This maximum bid capacity will include any capacity awarded per the LoA issued by IREDA in Tranche-I.

Last November, IREDA announced the list of successful bidders under Tranche-I. Reliance New Energy Solar’s PLI award amount was increased to ₹19.17 billion (~$254.24 million) from the earlier ₹11.90 billion (~$160 million) for a capacity of 4 GW. Shirdi Sai Electricals was awarded a PLI of ₹18.75 billion (~$252 million), for a capacity of 4 GW.

Adani Infrastructure was awarded a PLI of ₹6.63 billion (~$87.93 million) out of the total quoted amount of ₹36 billion (~$477.44 million) for a capacity of 737 MW under the bucket filling method.

Eligible bidders

A single company, joint venture, or consortium of more than one company can submit bids. In the case of joint ventures and consortiums, a partner will be allowed to tie up their manufacturing capacity at any stage with another partner for one bid only.

Manufacturing units which have availed any benefit under MNRE’s tenders for solar power purchase agreements linked to solar manufacturing will be eligible for benefits under this program.

Manufacturing units which have availed any benefit under the Ministry of Electronics and Information Technology’s Special Incentive Package Scheme (SIPS) and Modified Special Incentive Package Scheme (M-SIPS) will also not be eligible for benefits under this program.

However, any benefit under SIPS, M-SIPS, and manufacturing-linked tender can be availed by manufacturers for the difference of offered bid capacity and double the PLI awarded capacity.

Greenfield & Brownfield projects

If the letter of award is issued to a successful bidder of Tranche-I, the new capacity established will be considered greenfield even if it shares common facilities built for the capacity under Tranche-I.

Brownfield manufacturing units will involve the expansion of existing manufacturing facilities with the addition of new production lines within the existing physical infrastructure and will also be allowed to participate. PLI for brownfield projects will be 50% of the PLI receivable for greenfield projects.

Minimum module performance:

Manufacturers will also have to fulfill the minimum performance parameters. Either a minimum module efficiency of 21% with a temperature coefficient of Pmax better than -0.40% per degree Celsius or a minimum module efficiency of 20.05% with a temperature coefficient of Pmax equal to or better than – 0.30% per degree Celsius.

Calculation of PLI

PLI will be calculated as follows:

PLI (₹) to manufacturers = sales volume (Wp) × base PLI rate (₹/Wp) as per position in performance matrix) × tapering factor × local value addition.

Disbursement of PLI

The manufacturing units under the program will be eligible for PLI on an annual basis on sales of high-efficiency solar PV modules for five years from commissioning or five years from the scheduled commissioning date, whichever is earlier.

If commissioning is delayed, the PLI period will reduce from five years to the period of the delay in commissioning. A team constituted by MNRE or SECI will visit the manufacturing unit immediately after its commissioning to verify the committed extent of integration, manufacturing capacity, efficiency, and temperature co-efficient modules.

Manufacturers will be asked to provide a self-declaration and a Statutory Auditor’s or Chartered or Cost Accountant’s certificate in support of claims of PLI.

They must provide documents supporting the PLI claimed for a particular year based on sales (watt) of modules, percentage of local value addition, and PLI rate (as per the position in the performance matrix).

Commissioning timelines

The timeline for commissioning projects in basket one will be three years from the award date. Projects in basket two must be commissioned within two years from the award date. The time for commissioning projects in basket three is 18 months.

Penalties

If a selected manufacturer fails to meet the integration, capacity, or minimum module performance, the PLI will not apply until the deficiencies are overcome. If the manufacturer achieves the targets subsequently, PLI will be provided from the next month. However, in such cases, the manufacturer will not be able to get PLI for the full five years.