The Indian government has formulated a plan to subsidize solar power projects by the army, railways, and public sector enterprises.
According to some specific clauses in the WTO agreement, Indian government can provide subsidies to Indian army and public sector companies to set up 1,000-MW solar PV projects each.
Initially, the government will offer Rs 1 crore viability cost funding for each MW of capacity.
The condition for financing is that Indian-made solar cells, modules, and inverters will get a funding of Rs 50 lakhs per MW.
NTPC will take the lead among the public sector enterprises and is planning to set up some large-scale solar power projects with capacity of up to 1,000 MW.
However, the US government had challenged Indian regulations on domestically manufactured equipment, but Indian officials claim that the new scheme is WTO compliant.
Governments are allowed to procure domestic equipment for defense purposes and thus the use of Indian-made solar power equipment is justified, the sources claim.
Besides, Indian government has asked the cell and module manufacturers to operate their production lines at full capacity as well as to increase production capacities.
BHEL, state owned power equipment manufacturer has plans to set up solar cell and module manufacturing facility.
Moreover, the army and railways are heavy consumers of electricity and if solar power is installed significantly it will reduce their financial burden.
Railways, which pay some of the highest electricity tariffs among all consumer groups, will have their own power generation capacity.
NTPC can integrate solar power with coal-based power allowing companies to meet their power demand and fulfill renewable purchase obligation.