Project delays and uncertainty over COVID-19 are why India’s ACME Solar cancelled its record ₹2.44 rupees ($0.0323) per unit, lowest tariff, contract with the Centre-backed Solar Energy Corp of India (SECI). The company said land acquisition delays coupled with delays over disruptions in supplies from China because of the pandemic forced them to claim an exit under “force majeure”.
In 2017, ACME’s winning bid of ₹2.44 ($0.0323) per unit to set up a 200 MW project in Rajasthan helped India attain low solar energy prices. The company told the regulator Central Electricity Regulatory Commission (CERCI) that uncertainty over COVID-19 would further delay projects that had already been delayed by 15 months.
SECI rejected ACME’s claims of delays saying there was nothing that prevented the company from implementing the projects. SECI also threatened to encash ACME’s bank guarantee, but later decided to resolve the issue “by mutual discussion”.
Meanwhile, COVID-19 related delays have actually shifted 2020 solar project timelines to 2021, resulting in an estimated 5,000 MW capacity addition in 2020, which is 32% lower than 2019, a Mercom report said. However, a new report by Paris-based IEA estimated India’s solar PV deployment to fall by 23% in 2020 compared to 2019, with the largest drop anticipated in distributed PV installations. IEA, however, expects solar projects to bounce back in 2021 with capacity additions exceeding 2019 levels.
India’s solar tariff is 30% cheaper than current coal power cost: IEEFA
Despite tumbling tariffs and uncertain returns, why are global investors backing solar projects in India? That’s because the country’s current solar tariffs, oscillating between the lows of ₹2.50 to ₹2.87 per unit, are 20-30 % cheaper than the cost of coal-generated power, says the latest joint study by IEEFA and JMK Research. Experts say the 10-12% returns are very competitive compared to coal plant tariffs and profitable for discoms entering long-term power-purchase agreements.
Analysts say the developers factor in the risks while assessing the cost of every component. Factors such as sources of funds, risk-taking appetite, the project pipeline, interest rates, module costs, and capacity utilisation factors (CUF) have a hand in tariff costs and returns, according to experts.
Since 2016, India’s solar installations have jumped from 6 GW to almost 35 GW, covering a third of the ambitious 100 GW by 2022 solar target.
Nearly 6,00,000 clean energy jobs were lost to COVID-19 lockdown in the US
According to an analysis of US unemployment data, the country lost nearly 6,00,000 jobs in the clean energy sector since the lockdowns stopped production of components used in the solar industry, electric cars and installations in homes and offices. In March itself, when the lockdowns started, 1,47,100 clean energy jobs were lost. After that, an additional 4,47,200 jobs have been lost in the sector. The numbers have exceeded the projections made by BW Research Partnership last month, which was 5,00,000 clean energy jobs by June. That figure has been revised to 8,50,000 now.
Analysts expect unemployment in the clean energy sector to only rise. According to US federal data, unemployment claims touched 33.5 million since mid-March. The sudden unemployment has been a rude shock for what had been a growing clean energy industry. The analysis said nearly 6,00,000 lost jobs is more than double the number the sector has created since 2017.
Australia’s Reserve Bank study triggers calls for stimulus to renewables
Will Australia provide stimulus to its much-ignored renewables energy sector as part of its economic recovery post lockdown? A March study conducted by the Reserve Bank of Australia (RBA) exposing a huge decline in investments in renewables energy sector in the wind and sun-rich country in 2019 has triggered calls for the central and state governments to revive the sector as part of the post-pandemic recovery.
According to RBA, in 2018, Australia witnessed an increase in renewables investment amounting to 5% of non-mining business investments then. But a year later, only 50% of the large-scale clean energy projects could be launched. Experts say the sectoral decline may continue since the country doesn’t have fresh targets and issues of integrating solar and wind farms to the national grid in far-flung areas haven’t been resolved.
US is world’s most favoured RE destination in 2020, not China: EY
Consultancy firm Ernst & Young (EY) has designated the US as the world’s most favourable RE market, followed by China, in its annual list of 40 most favourable RE business destinations. The US bagged the top spot after 2016. EY said the US won mainly because of its short-term extension of a production tax credit for wind projects and $57 billion investment plan to install up to 30 GW of offshore wind by 2030, the report said.
Analysts are expecting a huge surge in RE investments in the US this year since wind projects, which began construction in 2016, need to be operational by the end of the year to qualify for the US tax credit. EY reported that China RE growth slowed because it gradually withdrew RE subsidies. China also witnessed a fall in demand, which impacted its global ranking.
Denmark to build two “energy islands” of offshore wind capacity
Denmark has decided to build two ‘energy islands’ of 40 GW of offshore wind capacity as part of its 2030 target to reduce emissions by 70% from 1990 levels. Denmark has also pledged to be carbon neutral by 2050. The legally binding target, which was approved by parliament six months ago, is one of the most ambitious globally. The energy island proposal is subject to parliamentary clearance.
The two islands will be capable of generating more power than Danish households’ annual consumption. The government plants to export its green power to neighbouring European countries. One of the two islands would be artificially built in the Northern Sea (connecting to Netherlands) and the other at the natural island of Bornholm in Baltic Sea (connecting to Poland).