Solar Component

As solar project developers look to procure the cheapest possible components to bid at the lowest tariff in auctions, the Ministry of New and Renewable Energy (MNRE) has issued a new order with an eye toward quality project development in the sector.

MNRE has issued the – Solar Photovoltaics, Systems, Devices, and Components Goods (Requirements for Compulsory Registration) Order, 2017. This new order will come into force one year after its date of publication in the Official Gazette of the Government of India.

The MNRE stated, “Any manufacturer who manufactures, stores for sale, sells or distributes goods must make an application to the Bureau of Indian Standards (BIS) for obtaining registration for use of the standard mark in respect of the Indian standard.”

According to the agency, utilization of low quality materials and equipment for project construction will not be tolerated. The MNRE in its order added that, “The substandard or defective goods which do not conform to the specified standard will be deformed beyond use and disposed of as a scrap by the manufacturer or the representative of the overseas manufacturer from a liaison office or branch office located in India or by any agency authorized by the manufacturer to act as its representative in India.”

At any point, officials can demand samples from suppliers and manufacturers to verify if they conform to BIS standards, according to the guidelines.

An MNRE official aware of the development told Mercom, “This is a necessary step, we have been hearing from stakeholders that project quality should improve and this order will take care of the quality of materials utilized.” It will also stop the supply of below-par modules and other supplies to India and increase the project capacity utilization factor (CUF), the MNRE official added.

The MNRE official also said that developers have utilized cheap modules to increase profits, but the sector only profits when quality is maintained.

“This move is welcome and project quality is extremely important considering PPAs are signed for 25 years. However, it is the government agencies that are putting a lot of pressure on developers to come up with the lowest possible bids. Even though higher quality components are widely available for purchase, pressure to bid low and make the project economics work is what is driving developers towards cheaper and lower quality products,” said Raj Prabhu, CEO of Mercom Capital Group.

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