Weekly Power Sector Round up: 1st August 2020

Safeguard duty on Chinese solar panels extended for another year

The Government has extended the safeguard duty imposed on Chinese solar panels for another year, up to July 29, 2021. The duty will be 14.9% for six months, from July 30, 2020 to January 28, 2021 and then be decreased to 14.5% for the remaining period.

The safeguard duty has been in effect since 2018 when it was imposed for a period of two years, the duty being 25% for the first year and 20% for the second. The duty was imposed on solar equipment imported from China and Malaysia. However, Malaysia has been excluded from the duty in the latest notification.

A BCD (basic customs duty) on solar panels and cells was also announced as part of the Budget and was indicated to be effective from August 2020. However, there has been no official notification regarding the same.

Solar developers have been vociferously opposing the duty and the lack of clarity in the policy which has been impacting their forecasts and thus, is likely to affect solar power plant development in the country.

Renewable energy certificate sales down 50% to 3.49 lac in June

The sales of RECs (Renewable Energy Certificates) fell 50% to 3.49 lac units in June, compared to 6.98 lac in the same period last year. One REC is generated when one MWhr of electricity is generated from an eligible renewable energy source.

RECs are traded on the Indian Energy Exchange (IEX) and the Power Exchange of India (PXIL). Significantly higher amount of sell bids were listed as compared to the buy bids on both exchanges, which indicates high supply but low demand.

RECs are a market based instrument which allows bulk purchases of power to purchase Renewable Energy which contributes to their RPO (Renewable Purchase Obligation) set by the regulator.