Production Linked Incentive Scheme Tranche-I Under National Programme on High Efficiency Solar PV Modules

Production Linked Incentive (PLI) Scheme Tranche-I under the National Programme on High Efficiency Solar PV Modules supports manufacturers who build high efficiency solar modules in India. Ministry of New and Renewable Energy (MNRE) runs this scheme through Indian Renewable Energy Development Agency (IREDA), with the aim of making the country depend less on imported solar equipment.

This tranche was approved by the Union Cabinet on 7 April 2021 with an outlay of ₹4,500 crore spread over five years. Letters of Award were issued by IREDA in November and December 2021 to three successful bidders to set up 8,737 MW of fully integrated solar PV module manufacturing units. The scheme is still in force and incentives are being paid to the selected manufacturers as per the official guidelines.

PLI Scheme Tranche-I Under National Programme on High Efficiency Solar PV Modules - Introduction

The Production Linked Incentive (PLI) Scheme Tranche-I is a central scheme that rewards solar module makers on the basis of how much they sell. The more a manufacturer produces and sells high efficiency modules with good local content, the higher the incentive. This method helps build a strong domestic base of solar manufacturing and lowers the need for imports in the renewable energy field.

The scheme is implemented in two tranches. Tranche-I has an outlay of ₹4,500 crore and is handled by IREDA. Tranche-II, approved on 21 September 2022, carries an outlay of ₹19,500 crore and is handled by Solar Energy Corporation of India (SECI). This article is about Tranche-I only.

Below is a quick summary of the key details:

Objectives

The main aims of this scheme are listed below:

• Build up local manufacturing capacity for high efficiency solar modules so the country does not have to buy so much from abroad.
• Bring modern technology to India for making high efficiency modules. The scheme does not favour any one technology but rewards modules with better performance.
• Encourage integrated plants where cells and modules are made together, which gives better quality control and keeps costs down.
• Develop a local ecosystem for sourcing raw material used in solar manufacturing.
• Generate jobs and move towards technological self-sufficiency in solar power.

Benefits

Production Linked Incentive is paid for five years from the date of commissioning of the plant, or from the scheduled commissioning date, whichever comes earlier. The incentive is worked out with a simple formula:

PLI (₹) = Sales Volume (Wp) x Base PLI Rate (₹/Wp) x Tapering Factor x Local Value Addition.

Payment depends on a few conditions. The incentive goes up as the level of local value addition in the module goes up, so manufacturers are pushed to source more material from India. Brownfield projects are eligible but receive only 50% of the Greenfield PLI rate. Tapering factors apply in a fixed order: Year 1 (1.4), Year 2 (1.2), Year 3 (1.0), Year 4 (0.8) and Year 5 (0.6). In simple words, the incentive is higher in the early years and reduces later.

Eligibility

Only manufacturers who plan to set up solar cell and module making capacity can apply. A company, a joint venture or a consortium can take part. The proposed plant must have a minimum manufacturing capacity of 1,000 MW, and the applicant has to commit to integration across solar cells and modules.

Module performance also matters. The module should have a minimum efficiency of 19.50% with a temperature coefficient better than -0.30% per degree Celsius, or a minimum efficiency of 20% with a temperature coefficient equal to or better than -0.40% per degree Celsius. Greenfield projects are encouraged, while Brownfield projects may join under the specific terms of the scheme.

Exclusions

Some entities cannot take part in this tranche. This includes applicants who have already got benefits under MNRE tenders linked to photovoltaic manufacturing, entities that have claimed benefits under SIPS or M-SIPS of the Ministry of Electronics and Information Technology, and applicants who imported capital goods for the manufacturing facility before the bid submission deadline.

Application Process

The scheme works through a clear bidding process run by IREDA. The steps are given below:

STEP 1 - Take part in the bidding process called through the official tender. Every interested manufacturer has to quote through the IFA (Invitation for Application) document floated by IREDA.

STEP 2 - Submit the application to IREDA with all required details, including the manufacturing plan, capacity and module performance figures, before the deadline.

STEP 3 - IREDA checks every application on the basis of the extent of integration, manufacturing capacity and module performance, and then draws up a merit list.

STEP 4 - Selected bidders must sign the Contract Agreement with IREDA and submit a Performance Bank Guarantee as per the terms.

STEP 5 - The plant must be commissioned within the given timeline, which can be 1.5, 2 or 3 years depending on the terms agreed.

STEP 6 - After commissioning, annual claims are submitted along with the required documents, and IREDA verifies them before releasing the incentive.

Documents

Following papers are needed while applying and while claiming the incentive:

1. Bid application documents.
2. Performance Bank Guarantee.
3. Self-declaration for PLI claims.
4. Certificates from statutory, chartered or cost accountants.
5. Proof of module sales.
6. Documents that show the local value addition in the modules.

For any query about the scheme, manufacturers can contact IREDA at the number +91-11-24347761 or write to plischeme@ireda.in.

References

• Official Website of the PLI Scheme
• Scheme Guidelines for Tranche-I
• List of Successful Bidders under Tranche-I
• IREDA PLI Scheme - Solar Module Documents

FAQ's

What is the objective of the scheme?

The scheme aims to encourage high efficiency solar module manufacturing in India, bring in modern technology, support integrated plants, build a local supply chain and create jobs.

Which ministry implements the scheme?

Ministry of New and Renewable Energy implements the scheme through Indian Renewable Energy Development Agency (IREDA).

What is the financial outlay?

Tranche-I has a total outlay of ₹4,500 crore paid out over five years.

Are Brownfield projects eligible?

Yes, Brownfield projects can take part, but they receive only 50% of the applicable Greenfield project PLI rate.

What is the minimum capacity required?

Applicants must commit to setting up a manufacturing plant with a minimum capacity of 1,000 MW.