CareEdge Report: Domestic Cell Mandate Delay Supports RE Growth

CareEdge Ratings has released its latest report titled Domestic Cell Mandate Delayed: Boost for RE Growth, Test for Regulators, analysing the implications of the Ministry of New and Renewable Energy’s (MNRE) recent changes to the Approved List of Models and Manufacturers for solar cells (ALMM-II).

The notification dated July 28, 2025, introduced a cut-off date of August 31, 2025, exempting earlier bids from the domestic cell mandate. This step aims to address the ongoing shortfall in domestic cell capacity while sustaining the trajectory of renewable capacity growth.

As of June 2025, ALMM-I listed module capacity surged to nearly 91 GWp, while domestic solar cell capacity stood at ~27 GWp. The effective supply of cells is further constrained by exports to the U.S. market. CareEdge notes that although module capacity has grown rapidly, the complexity and high capital costs of cell manufacturing continue to keep it behind.

For ~12 GWAC of renewable energy capacity awarded since December 2024, replacing costlier DCR modules with non-DCR modules could reduce solar project capex by approximately ₹0.45 crore/MWp, potentially lowering plain vanilla solar tariffs by ₹0.3–0.4 per unit. However, projects awarded between December 2024 and July 2025 at higher tariffs could face renegotiations, cancellations, or regulatory delays, as reverse change-in-law interpretations remain untested in the sector.

Commenting on the regulatory uncertainty, Jatin Arya, Director, CareEdge Ratings, stated:

“The revision in the framework for the applicability of ALMM-II modules is likely to bring its own set of complications. While it ensures continuity in India’s renewable energy growth trajectory, which the limited availability of domestic cells could have jeopardised, the frequent policy shifts present a unique challenge for regulators and offtakers. Whether and how REIAs can enforce a reverse change-in-law interpretation remains uncertain and could mark a first for the industry.”

He further added:

“If these bids come up before regulators for a downward tariff revision, the situation could become more complex, as developers may contend that they have already placed orders with domestic suppliers, and reversing these could result in material losses. Even if such projects move forward, they are likely to face prolonged regulatory scrutiny and an extended gestation period before resolution.”

CareEdge concludes that while the revised mandate safeguards renewable energy expansion, its execution could bring new regulatory complexities, testing both developers and policymakers.

Full Report Attached: Solar_Equipment_Manufacturing_-_CareEdge_Report