As first reported by Mercom that the government is considering exempting solar projects from procuring modules listed in the Approved List of Models and Manufacturers (ALMM), the government has held in abeyance the implementation of the ALMM order for the financial year 2023-24.

Solar projects commissioned by March 31, 2024, will now be exempted from procuring modules listed under ALMM, a Ministry of New and Renewable Energy (MNRE) notification has said.

The notification said that MNRE’s office memorandum of 2019 mandating the use of only those modules enlisted under the ALMM order and subsequent amendments until the latest one on October 7, 2022, will be suspended for one financial year.

After Mercom broke the news, Minister of Power and New and Renewable Energy R.K. Singh confirmed that the ALMM order would be relaxed for two years. However, the implementation of the ALMM order has now been postponed for one year.

Singh had said that the fledgling domestic module manufacturing capacity was insufficient to cater to the large planned solar capacity pipeline. This could have jeopardized the goal of reaching 280 GW by 2030 from just over 60 GW.

The minister had told a media house, “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, and at that time, Niti Aayog said it was a complete barrier. I said it was necessary. But I have expanded the bidding so fast that my existing domestic capacity is not able to meet it.”

Singh said India had about 70 GW of solar capacity under implementation, while the manufacturing capacity of 500 Wp (modules) and above was a measly 10 GW. With this manufacturing capacity, it would take India seven years if the entire module supply came only from domestic manufacturers.

While the latest government decision to relax the implementation of the ALMM order would disappoint domestic manufacturers, it has come as a big relief to developers who have been struggling to procure modules at competitive prices.

Developers were not only facing a shortage of Indian-made modules but were also hit by a 40% Basic Customs Duty on imported modules. This virtually shut the door on cheaper Chinese module imports.

The ALMM mandate has resulted in delays in project development. India could only add 13 GW of solar capacity in 2022, against 10.2 GW installed in 2021, according to the 2022 Q4 & Annual India Solar Market Update.

India would have been able to add more solar capacity in 2022 but for the ALMM mandate and a few other challenges.

The latest MNRE order exempting solar projects from procuring only those modules enlisted under ALMM raises hopes of higher-than-anticipated power generation capacity additions this year and the first quarter of next year.