According to advocacy and research major, Centre for Science and Environment (CSE), the US is ruining the Indian domestic solar photovoltaic (PV) manufacturing industry by using the climate ‘Fast start financing.’
CSE says that around 80 per cent of the domestic PV manufacturing capacity in India is facing almost forced closure and debt restructuring in wake of drying up of orders. However, contrary to this, the US manufacturers and their subsidiaries in India are enjoying a good run, as they are loaded with orders from the Indian solar power developers.
Speaking about the Fast start financing, CSE’s deputy director general, Chandra Bhushan, said, that US $30 billion fund has been set up under the United Nations Framework Convention on Climate Change. “The fund, adopted at the Copenhagen climate meeting in 2009, is supposed to help developing countries deal with climate change impacts and limit greenhouse gas emissions,” he informed.
Bhushan added that the US was ingeniously using this fund as a means to promote its own solar manufacturing which is hampering the prospects of the Indian domestic manufacturers. The Indian solar power developers are being offered low-interest loans by the US Exim Bank and the Overseas Private Investment Corporation (OPIC) with the riders that they will be equipment, solar panels and cells from US companies.
India has been aggressively promoting solar power projects since 2010 as part of the National Action Plan on Climate Change (NAPCC) of which Jawaharlal Nehru National Solar Mission (JNNSM) is a part which aims to install 22,000 MW of solar power capacity in the country by 2022. The model is using a mix of feed-in-tariffs and Renewable Purchange Obligations (RPOs), and within a span of three years, the country has shot from almost zero to close to 1,000 MW of solar power installations.
Though the JNNSM mandates a domestic content requirement which calls for buying domestically manufactured solar power equipment, however, the same is being observed for the crystalline PV technology and not for the thin-film PV technology, which is sourced from outside India. Close to 60 per cent of the panels installed in India are thin-film based; however, only 14 per cent of global capacity is thin-film.
Taking advantage of such loophole, the financial institutions from the US are offering low rates of interest at about 3 per cent and a long repayment schedule of up to 18 years to Indian solar project developers with the condition that they have to buy thin-film panels manufactured by US companies. Since the loans from Indian banks come with an interest rate of close to 14 per cent or more, the move has skewed the market in favour of thin-film panels imported from US despite their lower efficiency as compared to crystalline panels.
Condemning the tactics of the US financial institutions for exploiting the Indian solar power developers by misusing the Fast start financing, Bhushan said that it was totally unethical. He said that Fast start financing was supposed to benefit the developing country recipient, but it has been using it to its pervert advantage. “The US has managed to turn it into a game where funds registered as climate funding is given out as loans to projects that promise to buy equipment made in the US thereby benefiting themselves while knocking out the Indian manufacturing competition that doesn’t have the same government backing,” he said.
Kushal Yadav, head of CSE’s Renewable Energy team says, “Interestingly, the US government has put anti-dumping duties on solar equipment imported from China because of the alleged subsidies that China is giving to its solar manufacturers. However, the US is engaging in a similar practice in India by subsidising loans for buying American equipment!”