Indian solar developers backed by global investors are planning to avoid solar equipment supplies from Xinjiang, China, following reports of alleged use of forced labour by manufacturers, said two people aware of the development, seeking anonymity.
The issue has gained traction amid the growing focus on meeting environment, social and governance (ESG) compliance requirements.
Clean energy firms are asking tough questions on the code of conduct and have asked Chinese suppliers to follow the Solar Industry Forced Labour Prevention Pledge.
The development comes days after the US department of commerce banned imports from five Chinese solar firms for using forced labour in Xinjiang and alleged human rights violations against Uyghurs and other minority groups.
“The ESG lens is forcing independent power producers and energy producers to relook at supply chains for setting up projects to stay compliant to government and regulators, and address investor and stakeholder concerns,” said Sambitosh Mohapatra, leader for ESG, energy utilities and resources practice, PwC India.
India is running the world’s largest clean energy programme and has a solar power generation capacity of 41.09 GW. It plans to achieve 100 GW of solar power by 2022.
“We anticipate significant value erosion for manufacturers in countries which have policies with disregard for planet, people and communities. Recasting supply chains, portfolios and deal-led initiatives will be at the base of this change,” Mohapatra added.
The issue assumes significance considering the quantum of imports of solar power equipment from China.
Besides, over $70 billion has been invested in India’s green economy by global investors and utilities. At present, India has a domestic manufacturing capacity of only 3GW for solar cells and 15GW for solar modules. The segment has been dominated by Chinese solar module manufacturers such as Trina Solar Ltd, Jinko Solar, ET Solar, GCL-Poly Energy Holdings Ltd and Chint Solar.
“We have given show cause notices to our suppliers asking whether this is true or false. We have also asked them to give us the confidence that human rights are not violated. We have made it amply clear that if the answers are not satisfactory, we won’t work with them,” said the CEO of a foreign power developer setting up projects in India, and one of the two people cited above.
“A majority of Indian solar developers having foreign funding have been insisting on a letter of declaration and certification that we are not indulging in such practices,” said the India representative of a Chinese solar power equipment firm, who also did not want to be named, and the second person cited above.
Source : Live Mint
