The Ministry of New and Renewable Energy (MNRE) has issued an advisory regarding the procurement of modules for the operation and maintenance (O&M) of the desired Capacity Utilization Factor (CUF) of solar projects developed under the Domestic Content Requirement (DCR) category.

“Since there is no clause mandating the replacement of solar cells/modules from the domestic market in the Power Purchase Agreements (PPAs) for the DCR category, projects built under the DCR category can replace defective cells/modules in the open category (can be imported),” the MNRE letter said.

This ruling is applicable to all the PPAs that have been executed as well as the PPAs that are in the process of finalization. It will also be applicable to any future PPAs that will be signed under the National Solar Mission Program. The solar power developer is not required to source the replacement under the DCR category.

The MNRE also directed the agencies to not take up any new project with the DCR provisions under the developer mode.

When contacted, an MNRE official told Mercom, “Again, the US raised questions regarding our (India’s) willingness to adhere to scrapping of the DCR category. Not a single DCR tender has come out since December 14, 2017. We are thinking of the DCR only for captive consumption by the Central Public Service Units (CPSUs).”

“The MNRE’s advisory will act as a closure to the DCR issue. Now, we have cleared a pathway wherein foreign modules can be used to replace domestic modules even for DCR category projects, if the developer so wishes. Now, no one can challenge our policies concerning solar at the WTO,” the MNRE official added.

This comes as good news for the sector as developers undergoing quality and reliability issues can now easily replace the older panels with imported modules.

The advisory has been released after the U.S. took the next step and requested the WTO Dispute Settlement Body (DSB) authorization to impose retaliation measures (suspend concessions or other obligations) against India.

Earlier, the U.S. had said that India failed to comply with recommendations and rulings of the DSB before the December 14^th deadline and requested that the DSB authorize the suspension of concessions or other obligations with India at an annual level based on a formula proportionate to the trade effects caused on U.S. interests by India’s failure to comply. The U.S. also said that the parties have not reached an agreement on the compensation there for it is entitled to authorization by the DSB to take countermeasures under Article 22 of the DSU.

The dispute started in 2013 when the U.S. requested consultations with India through the WTO regarding India’s DCR program. The DCR program was part of the country’s National Solar Mission and mandated that only domestically manufactured solar cells and modules could be used to build solar projects auctioned under the DCR category. The case was referred to the DSB in 2014 and the final recommendations were issued by the WTO in February 2016.

India appealed the decision in April 2016, but the WTO upheld its earlier ruling in October 2016 and agreed with the U.S. that India’s DCR program discriminated against American and other imported solar products like cells and modules, which was a breach of the international trade rules.

Government officials told Mercom last year that if the government is investing, then the DCR ruling is not violated. The assumption was that the CPSUs are government-funded organizations and not private.

Image credit: Mercom India