Citing the forthcoming duties on imported PV products, Norway’s Scatec and India’s Acme Solar have decided to put their 900MW PV project in the Indian state of Rajasthan on hold. This news was first announced by Scatec in its latest quarterly presentation and then reported by other news outlets including the Economic Times.

The Indian government will impose a 40% duty on imported PV modules and a 20% duty on imported PV cells starting this April. This measure is designed to curb the country’s reliance on foreign PV product manufacturers and promote the growth of the domestic PV industry. While Scatec maintains that India remains a major solar market, the country’s policies concerning the trading and manufacturing of PV products have resulted in a lot of uncertainties. Therefore, the joint project with Acme has been pushed back from the backlog phase to the pipeline phase.

Scatec and Acme each have a 50% stake in the 900MW project in Rajasthan. Scatec formally entered the Indian solar market last year by forming a partnership with Acme. The total investment in the project is set at USD 400 million. Two-thirds of that amount is to be raised through debt financing with an Indian state-owned lender. The construction of the project was originally scheduled to start this year, and a 25-year PPA with Solar Energy Corporation of India has been drawn up.

Besides the import duties, bottlenecks in the supply chain constitute another factor behind the suspension of the 900MW project in Rajasthan. However, the import duties appear to be the more significant cause. In its quarterly presentation, Scatec said that it is unsure if the Indian government will exempt this particular project from the import duties. The company is also unsure about the effects of the government’s policies on procurement activities. Specifically, will the government allow some imported PV products to be used in domestic PV projects, or will it mandate full localization?

Scatec believes module production lines in India will eventually operate at the same cost level as counterparts in China. However, such development will take some time. The company further pointed out that there is still a price gap between modules made in India and those made in China. It remains to be seen whether the import duties will affect other PV projects, thereby creating more problems than benefits for the Indian solar companies. In the meantime, Scatec will continue to develop its pipeline of PV, wind, and hydro projects in the country.

The Indian government released its Union Budget for 2022-2023 on February 1. The budget contains funding of INR 195 billion (USD 2.62 billion) toward programs and measures for boosting the domestic manufacturing of PV products. The Indian government is sticking with its target of installing a total of 280GW of PV generation capacity by 2030.