According to the center’s researchers, which are reviewing the first phase of India’s Jawaharlal Nehru National Solar Mission (JNNSM), 80% of India’s photovoltaic manufacturing capacity is in a state of “forced closure and debt restructuring”, because Indian project developers are placing their equipment orders with U.S. manufacturers.
Currently, the JNNSM requires all crystalline photovoltaic projects to use domestically manufactured products. However, thin film projects may procure their equipment from other regions; a loophole, says the CSE, being exploited by the Export-Import Bank of the United States (Ex-Im Bank) and the Overseas Private Investment Corporation (OPIC).
The center claims they have been offering rates of interest as low as 3% and long repayment schedules of up to 18 years to Indian project developers under the fund – designed to enable developing countries tackle climate change – if they purchase thin film panels from U.S. companies. In comparison, it says Indian banks are offering interest rates of around 14%.
“This has skewed the market completely in favour of thin-film panels imported from US despite the fact that thin-film has lower efficiency when compared to crystalline panels,” says the center in a statement released, adding, “Close to 60 per cent of the panels installed in India are thin-film type even though only 14 per cent of global capacity is thin-film.”
CSE goes on to quote the U.S. Department of State’s report on U.S. Fast start climate financing between 2010 and 2011, which reportedly shows that $248.3 million was awarded by Ex-Im Bank and OPIC for grid-connected photovoltaic plants in India. “The major beneficiaries in this case have been American producers such as First Solar and the now bankrupt Abound Solar,” it says.
Furthermore, the center claims the US is “fudging” its data on fast start finance. “When giving loans as aid, only the difference of the rate of interest between the ‘soft’ loan and a commercial loan is counted as aid. However, in this case, the US has counted the entire loan sum as aid under fast start finance. If a fair counting would have been done, the fast start financing amount shown by the US would be reduced to a fraction,” continues the statement. The U.S. says it has contributed $5.1 billion to the fund to date.
Outwith the fund, Ex-Im announced in July that it had authorized two loans worth US$57.3 million to support the development of 3 photovoltaic power plants in India, which will use First Solar thin film modules.
In a statement announcing the loans, Ex-Im Bank chairman and president, Fred Hochberg said the bank will be supporting India’s green-energy push. “These important transactions will finance the purchase of American products and services and support jobs in our innovative renewable-energy sector.”
Overall, the bank says it has provided $500 million for the financing of solar projects in India. Its goal is to “promote both the bank’s financial products, but also facilitate the purchase of U.S. goods and services.”
In 2009, the Copenhagen Accord agreed to establish Fast Start Finance, a US$30 billion fund contributed to by developed countries for developing countries to support the implementation of climate change measures between 2010 and 2012.
“Fast start financing was supposed to benefit the developing country recipient. Instead, 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,” states Chandra Bhushan, CSE’s deputy director general.
Referring to the ongoing U.S.-Sino trade dispute over solar cells, Kushal Yadav, head of CSE’s Renewable Energy team adds, “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!”
In the U.S. Department of State’s report, the funding transactions between 2010 and 2011 for India’s solar market include:
- $719,985 awarded to Astonfield Renewables Private Limited from the U.S. Trade and Development Agency (USTDA) for a feasibility study for 2 photovoltaic plants in India. “The projects will serve as some of the first solar photovoltaic (PV) projects in India deploying U.S. thin film technology.”
- $14.8 million from OPIC for the development, construction and operation of a 5 MW photovoltaic power generation facility in Gujarat. “The facility investor is a leading solar energy provider from the United States that will use advanced U.S. power generation technology in this plant in India.”
- A loan totaling $84.3 million from Ex-Im Bank to finance photovoltaic modules and related equipment for the Dahanu Solar project located in the village of Dhursar, in India’s Rajasthan State. “The financing will support the export of thin film, photovoltaic solar modules produced by First Solar.”
- An Ex-Im authorized a loan of $18.9 million to finance photovoltaic modules and related equipment for the Tatith Solar project located in Gujarat. “The project will utilize polycrystalline solar cells produced by Solarworld Industries America, LP.”
- A financial guarantee from Ex-Im worth $18 million to finance photovoltaic modules for the Acme solar power plant to be located in Gujarat. “The Acme plant will utilize thin film technology photovoltaic modules supplied by First Solar of Tempe Arizona.”
- An Ex-Im authorized loan of $15.8 million to finance photovoltaic modules and related equipment for the Azure Solar Plant project located in Rajasthan. “The photovoltaic farm will … consist of thin film technology photovoltaic panels supplied by First Solar of Tempe, Arizona.”
- An Ex-Im authorized guarantee of $9.2 million to finance thin film, photovoltaic modules and related equipment to Punj Lloyd Solar Power Ltd. of India for a photovoltaic project located in Rajasthan. “The solar modules for the project will be produced by Abound Solar, Inc. at its Colorado facility.”
- An Ex-Im authorized loan to Universal Solar System of India for $3.7 million to finance a photovoltaic power plant to be located in Gujarat. “The financing will support the sale of electrical inverters supplied by SMA America, LLC, of California as well as solar modules produced by Abound Solar Inc. at its Colorado facility.”
- $30 million from OPIC for financing the development, implementation and operation of a 120 MW monocrystalline silicon photovoltaic module manufacturing facility located in Hyderabad.
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