According to reports, the US has dragged India to the World Trade Organization for its scheme to incentivize locally-made solar cells, but an analysis shows that there are at least half-a-dozen American states that offer additional sops to equipment made or assembled within their jurisdiction.
The Jawaharlal Nehru Solar Mission (JNSM) requires investors to use locally-made solar modules and source 30% of the inputs from domestic sources, which the US has opposed. It has also protested against the local manufacturing clause in telecom equipment as well, another issue which may be headed to the WTO’s dispute panel.
But US states continue to incentivize local content. For instance, the Self-Generation Incentive Program offers an additional 20% bonus for California-supplied products. Similarly, Washington’s Renewable Energy Cost Recovery Incentive Payment Program offers higher incentive to locally manufactured equipment.
New Jersey’s Clean Energy Program offers an additional upfront incentive to encourage projects that use renewable energy systems or components manufactured or assembled in the state. An additional $0.25 per watt (of capacity) is available for projects using NJ-manufactured or NJ-assembled equipment, such as inverters, solar PV modules, wind turbines or blades or sustainable biomass system components, says a 2009 document.
In Texas, Austin Energy’s Solar PV Program, qualifying equipment that is manufactured or assembled in the utility’s service area can earn higher incentive. There is a similar benefit from CPS Energy, another electricity utility in the state.
The others on that list include Oregon and Massachusetts, said industry players but the information could not be located on the official websites of these states.
“WTO rules cover federal and sub-federal level incentives and subsidies,” said Biswajit Dhar, director General of Research & Information Systems, a think tank.
Indian officials did not comment on the issue but from all available indications, New Delhi may confront US officials during a discussion at the WTO’s dispute settlement body on Wednesday and Thursday, where the two trading partners are meeting to thrash out a solution to avoid a confrontation. But they did point to the Buy American Act of 1933 that mandates that all goods for public use be produced in the US, and manufactured items must be made in America from local materials. Then came the Buy America Act in the eighties that prescribes majority local content for iron and steel used in airports and highways.
The Indian government maintained there was nothing wrong with JNSM. “The solar mission and the government policy on renewable energy is aimed at providing a boost to sustainable energy processes and is perfectly in harmony with our international commitments,” commerce & industry minister Anand Sharma told TOI.
Officials said a part of the solar energy flows into the grid and helps meet the Millennium Development Goals on improvement in basic standards of living of the poor. Of the 2.11 lakh mega watt energy in the country, less than 1,500 MW is produces via JNSM.
The production cap for solar photovoltaic cells in terms of peak load is 1,000 MWp, while for modules it is 2,000, sources pointed out while making the case that the US is raking up an unnecessary issue. In the first round of bidding, 54% opted for PV modules of Indian origin, and in the second it was 30%.