The recent reimposition of the Approved List of Models and Manufacturers (ALMM) regulation has surprised industry stakeholders as the government withdrew exemptions for open access and unsubsidized rooftop solar projects.

The initial reimposition order in February was put in abeyance by the Ministry of New and Renewable Energy (MNRE) just days after it was notified.

The ALMM regulation, effective April 1, 2024, is now being reimposed in its original form from October 2022, with all categories of projects, including open access and rooftop solar, coming under its purview.

According to Mercom India Research, a pipeline of 14 GW solar open access projects as of December 2023 could be impacted by the reimposition of the ALMM mandate.

Module Prices May Surge

Solar open access project developers fear that module prices would rise without competition, affecting project costs and higher power tariffs in auctions.

With the ALMM regulation back in its entirety, only modules from the list can be used in the projects. The list still does not feature any international players or modules, which developers fear might lead to a price monopoly in the market in the absence of any competition.

An industry insider Mercom spoke to feels that the initial purpose of the ALMM order is now lost.

“ALMM was originally introduced to ensure that the quality of the imported or manufactured products in India meets a certain standard. It has become more of an artificial trade and technological barrier,” he said.

The recent ALMM update saw an addition of 3.5 GW of new capacity solar modules, taking the cumulative figure to 37.42 GW.

“Until recently, there was at least a threat of competition, so local manufacturers had to price their modules at competitive prices. We have always seen that if Chinese modules are priced at X, Indian modules will always be X plus one cent. There is no benchmark pricing in place, which will lead to a price monopoly in the market if left unchecked,” the industry insider said.

Price is not the only concern developers have. As one solar open-access developer said, domestic manufacturing capacities to meet the massive demand are as good as non-existent.

Developers Want Export Restrictions

According to a Solar Open Access Developer Mercom spoke to,” It will now be a module manufacturer faction that will decide the prices, whom to sell and whom not to sell. We blocked orders for some modules at certain pricing before the ALMM reimposition, and now they have clearly said that the earlier price will no longer apply but will go up. The  domestic manufacturers can easily say that the Chinese have increased cell prices and that they have no option to increase module prices.”

When the government decided to suspend the ALMM regulation for a year last year, it cited the low annual production capacity of high-rated (500Wp+) modules as the primary reason.

The capacity of modules rated at 500Wp+ continues to be low in the latest ALMM update.

According to Mercom India’s State of Solar PV Manufacturing in India 2024 report, the country’s cumulative solar module manufacturing capacity reached 64.5 GW at the end of December 2023. Yet, only 37.42 GW is listed in the ALMM.

The industry insider said the government cannot support high-growth industries in adopting affordable and sustainable green power solutions unless it directs domestic module manufacturers to supply within India first and then export the excess quantity only.

Developers have often raised concerns about domestic manufacturers choosing exports for better returns rather than meeting local demand.

The solar open access developer called for export restrictions on solar modules from India, mandating that they prioritize local demand against exports.

Higher Tariffs

With ALMM back in play, the industry fears module costs are expected to increase by 15-20%, necessitating reworking power purchase agreements.

Sharad Pungalia, MD & CEO at Amplus Solar, said, “Imposition of ALMM requirement on open access projects may cause disruptions and adjustments to the installation pipeline in the immediate future. Considering the demand-supply mismatch for the ALMM-compliant modules, we foresee price escalations, especially for the higher-efficiency modules, directly impacting the economics for the planned projects.”

An increase in PPA prices would upset C&I consumers, who were looking to transition to renewables to save on power costs.

The industry insider said, “With the ALMM reimposed, we have no choice but to revise our tariffs. If the customers are annoyed, we must explain the reality to them.”

Technology and Quality

The challenges are not expected to be limited to cost but also to the technology and quality of these modules.

According to Pungalia, the efficiency differences might lead to readjustments to future planned project designs and capacities, eventually impacting the installation timelines.

As India works toward climbing the module technology ladder, most solar manufacturers continue to produce P-type modules, whereas China has opted for N-type and advanced technologies.

According to the industry insider, only 20% of the manufacturers in the country today have module lines for N-type technologies, while the rest still manufacture P-type technologies. He feels that in the process of helping the domestic industry, the ministry is ‘depriving’ the country of the latest technologies.

Developers claim that Indian modules generate 1 to 2% less energy than their Chinese counterparts, primarily due to the semi-automated supply lines.

The industry insider suggested that the ministry allow four to five reputable Chinese manufacturers on the list to keep the competition alive. This would encourage other manufacturers to establish better manufacturing lines and supply high-quality products. Otherwise, the pricing would never be clear and competitive, and technology would become obsolete.

A few open-access developers hope the government will allow private projects to import modules, at least for C&I segment projects, which form a smaller segment compared with utility-scale projects.

They feel this would allow time for sufficient manufacturing capacity to be established and then phase out the exemption over the next six months.

Awaiting Clarity

Pungalia claimed that Amplus had informed the ministry about the planned projects where modules are procured and stored at the site but are yet to be commissioned due to factors beyond its control. He said he hopes to receive the exemption mentioned by the MNRE in the order.

However, a few other project developers are waiting for the MNRE to clarify which agency would handle the inspection part of the ‘procured modules at project site’ clause.

The industry insider raised doubts about whether all the states would take cognizance of the ALMM mandate. States could demand exemptions for their projects.

Some open access developers also have concerns about approvals from state agencies for projects where modules are in transit unless MNRE categorically allows them.

India needs to install about 26 GW of solar capacity annually to meet its 280 GW target set for 2032, so adequate module supply will be imperative. Domestic manufacturing must meet the demand and offer prices and technology on par with international players.