Fast-start finance is a $30 billion fund set up under the U.N. Framework Convention on Climate Change. Adopted at the Copenhagen climate meeting in 2009, the fund is intended to help developing countries deal with the affects of climate change.
"The U.S. has been very ingeniously using this fund to promote its own solar manufacturing," Chandra Bhushan, deputy director general of New Delhi's Center for Science and Environment, said in a statement.
CSE, in a report released Friday, says that the Export-Import Bank of the United States and the Overseas Private Investment Corp. are offering low-interest loans to Indian solar project developers under the condition that they buy equipment, solar panels and cells from U.S. companies.
As part of India's national solar mission, India aims to install 22,000 megawatts of solar energy by 2022.
The solar mission stipulates that all crystalline photovoltaic projects must use domestically manufactured products but equipment for thin film projects can be obtained from other regions. That loophole, CSE says, is being exploited by the Ex-Im Bank and the OPIC.
CSE says 30 percent of India's domestic solar photovoltaic manufacturing capacity "is in a state of forced closure and debt restructuring with no orders coming to them, while the U.S. manufacturers are getting orders from Indian solar power developers."
CSE said the United States has turned the fast-start mechanism "into a game where funds registered as climate funding is given out as loans to projects that promise to buy equipment made in the U.S. thereby benefiting themselves while knocking out the Indian manufacturing competition that doesn't have the same government backing."
CSE cites U.S. Department of State reports for 2010 and 2011 on fast-start financing that indicate $248.3 million had been disbursed by the Ex-Im Bank and OPIC for grid-connected solar plants in India.
"The major beneficiaries in this case have been American producers such as First Solar and the now bankrupt Abound Solar," the CSE report says.
CSE also cites the Ex-Im Bank's July 19 announcement that it had authorized two loans totaling $57.3 million to two Indian PV developers to finance the export of First Solar Inc.'s cadmium telluride thin-film solar PV modules and ancillary services for 50 megawatts of Indian PV plants.
CSE said "the misuse of fast start financing by the U.S. is unethical," stressing that the financing was intended to benefit the developing country on the receiving end.
Pointing to the anti-dumping duties the U.S. government has imposed on solar equipment imported from China, Kushal Yadav, head of CSE's Renewable Energy team said "the U.S. is engaging in a similar practice in India by subsidizing loans for buying American equipment."