The Ministry of New and Renewable Energy (MNRE) has issued draft guidelines to implement the second phase (Tranche II) of the Production-Linked Incentive (PLI) program under the ‘National Program on High-Efficiency Solar Modules’ to achieve gigawatt-scale high-efficiency solar modules manufacturing capacity.

The program aims to promote India’s domestic manufacturing of high-efficiency solar modules and reduce the renewable energy sector’s import dependence.

According to the draft guidelines for Tranche II, ₹120 billion (~$1.54 billion) has been reserved for companies setting up vertically-integrated capacities of polysilicon, wafers, cells, and modules. An allocation of ₹45 billion (~$580.84 million) has been made for those setting up wafers, cells, and modules capacity, and ₹30 billion (~$387.23 million) for cells and modules capacity.

Along with the initial allocation of $45 billion ($617 million), an additional allocation of ₹195 billion (~$2.51 billion) was announced in the Budget 2022-23 to establish a larger manufacturing base for solar modules by fully integrating manufacturing units from polysilicon to solar modules.

In February this year, the Indian Renewable Energy Development Agency (IREDA) announced an updated list of successful bidders to set up manufacturing capacities for a minimum of 10 GW of vertically-integrated high-efficiency solar modules under the PLI program.

Implementing Agency

The implementation of the PLI program (Tranche-II) is now handed over to the Solar Energy Corporation of India (SECI) from Indian Renewable Energy Development Agency (IREDA). SECI will be responsible for providing secretarial, managerial, and implementation support and carrying out other responsibilities assigned by MNRE. SECI will be eligible to have 1% of the PLI amount disbursed as administrative charges annually.

SECI will have the right to inspect the applicant’s manufacturing units and offices. It may take the help of the National Institute of Solar Energy to measure the efficiency and temperature co-efficient of modules. MNRE may also designate National Accreditation Board for Testing and Calibration Laboratories (NABL)-as accredited labs for such measurement. A project management unit will be established to assist MNRE and SECI in implementing the program.

Greenfield & brownfield projects

Greenfield or new solar module manufacturing units will be eligible for PLI. Brownfield projects will also be allowed to participate subject to meeting the criteria. However, brownfield projects will only receive 50% of the PLI receivable for greenfield projects.

The applicant manufacturer will have to commit to a minimum level of integration across solar cells and modules to qualify for the bid. Based upon the extent of integration proposed, the bidder can opt for bidding for any of the three baskets.

Manufacturing Capacity

The applicant will have to set up a minimum 1 GW manufacturing unit to qualify for the bid. The maximum capacity to bid is 10 GW for polysilicon, wafer, cell, and module; 6 GW for wafer plus cell and module; and 6 GW for cell and module categories. However, the maximum capacity awarded to one bidder under the PLI program would be 50% of the bid capacity. The maximum bid capacity includes any capacity bid for earlier, against which PLI has been awarded.

Bidders eligible for PLI

The bidder can be a single company or a joint venture/consortium of more than one company. In the case of a joint venture/consortium, a partner/company will be allowed to tie up their manufacturing capacity (of any stage) with another partner/company for one bid only.

The selection of the beneficiaries will be by the bucket-filling method, keeping in view the overall PLI limit of ₹195 billion (~$2.51 billion)and the PLI requirements quoted by the bidders. The bidder getting the highest marks/inter se position will get PLI amount for five years as quoted, followed by the second bidder, and so on until the PLI amount is exhausted.

Manufacturing units that have availed any benefit under MNRE’s tenders for solar power purchase agreements linked to PV manufacturing or special incentive package scheme (SIPS)/modified SIPS program of the Ministry of Electronics & Information Technology will not be eligible under this program.

Calculation of PLI

PLI will be calculated as follows:

PLI (₹) to manufacturers = yearly sales volume (Wp) × local value addition expressed in a fraction of one × tapering factor × Integration Factor (corresponding to the stated level of integration) × base PLI rate (₹/Wp as per position in performance matrix).

Performance matrix

Manufacturers will have to fulfill specific minimum values of module performance (combination of module efficiency and module’s temperature coefficient of Pmax) and local value addition to be eligible for PLI, as follows:

Commissioning timelines

Facilities integrating polysilicon, wafer, cell, and module manufacturing must commission the unit within three years after approval. Wafer, cell, and module integrated manufacturing units must commission within two years. Cell and module manufacturing units must start operations within one and a half years from the approval date.

Disbursement of PLI

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

A team constituted by MNRE or SECI will visit the manufacturing unit immediately after its commissioning to verify the extent of integration, manufacturing capacity, efficiency, and temperature coefficient of modules.

Penalties

A selected manufacturer failing to meet the promised integration or capacity or minimum module performance will not get any PLI until the deficiencies are overcome. If the manufacturer achieves the promised levels subsequently, PLI will be applicable from the following month. However, in such cases, the manufacturer will not be able to get PLI for the full five years.