Having installed 9.5 GW of new solar PV capacity in India in 2019, pre-virus expected PV installations of 11.8 GW are now likely to drop down to 8.9 GW in 2020 in the post-virus era, according to Wood Mackenzie. (Photo Credit: Wood Mackenzie)
- Wood Mackenzie analysts fear India’s lockdown due to COVID-19 pandemic delaying 3 GW of solar PV and wind power installations
- India’s dependence on Chinese modules is another reason the country’s solar installations will take a hit
- Regions favorable for solar power installations as Karnataka, Tamil Nadu and Rajasthan also happen to the worst impacted states with coronavirus infections
- Any extension of the lockdown period will lead to discoms feeling financial crunch, eventually impacting the cash flows of renewable energy generators
- Corporate financing for new project development will also get difficult to procure
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An extensive and longstanding lockdown in India as part of the country’s COVID-19 strategy is proving to be detrimental for the growth of renewables – Wood Mackenzie Power & Renewables expects delay for 3 GW of solar PV and wind power installations as a result. This would include 21.6% of all solar PV and wind power installations planned in the country.
400 MW of wind power could be extended into 2021 and as for solar PV the analysts bigger impacts since for its 80% module requirements, India depends on Chinese supply.From the pre-virus expected solar PV capacity of 11.8 GW for 2020, Wood Mackenzie sees only 8.9 GW coming online in India in 2020 in post-virus era.
“Current supply and labour disruptions will have an outsized negative impact on 2020 installations. Q1 is expected to be strongly impacted with a potential 60% year-on-year quarterly downgrade, or 1.2 GW, down from about 3 GW in Q1 2019,” said Senior Analyst Rishab Shrestha about solar PV market of India.
The analysts also point out the fact that the regions with the highest coronavirus infection are also the ones favorable for wind and solar power development – for solar these states are Karnataka, Tamil Nadu and Rajasthan, together accounting for 55% of PV installations last year.
If the lockdown would be extended from the current 21-day period that ends on April 14, 2020, Wood Mackenzie sees the financial situation of electricity discoms to be negatively impacted which in turn will impede cash flows for renewable energy generators as corporate bank loans for new project development get hard to come by.
“We remain cautious on the outlook for the second half of the year as supply and logistics bottlenecks linger. Consequently, our full year downgrade stands at 2.9 GW, a 24.8% reduction resulting in a revised 2020 outlook of 8.9 GW of solar PV installations,” added Shrestha.
Wood Mackenzie’s assertions give strength to claims made by CRISIL in February 2020, soon after India reported its first confirmed case of coronavirus. CRISIL estimated that about 3 GW of solar power project capacity worth INR 160 billion might face completion delay due to the virus impacting delivery schedule (see Coronavirus Could Derail 3 GW Solar PV Capacity In India). However, after China seems to have overcome COVID-19 for now, most solar companies are in full production again, the issues negative impacting installations are on the demand side, as discussed in a TaiyangNews webinar in early April (see COVID-19: China Recovering But Global PV Demand To Take A Hit)
The Indian Ministry of New and Renewable Energy has allowed developers to invoke force majeure clause due to COVID-19 impacting project commissioning delay for renewable energy (see India Allows Force Majeure For COVID-19 Delaying RE Projects).