Are India’s wind energy targets for 2020 in a free fall, following the coronavirus-led lockdown? Most of the major turbine manufacturers such as Siemens Gamesa, Vestas, GE and Inox Wind have suspended production. BloombergNEF has slashed its projection of India’s wind energy capacity in 2020 by 24% to 1.95GW from an earlier forecast of 2.56GW. The forecast may further shrink as the lockdown is extended to May 3. Siemens Gamesa and Vestas have also halted production at their headquarters in Spain and Denmark, according to a Reuters report. GE attributed the suspension of production to employee health. Experts say the sector is already troubled by low ceiling tariffs, renegotiation of power purchase agreements (PPAs), and connectivity delays for the past two years.
But some industry insiders said operations can resume as the sector does not have to depend on Chinese imports. Reports suggest foreign markets have also been hit by the developments in India since they depend on the supplies from Indian wind equipment manufacturers. India is the largest wind turbine production base after China in the Asia-Pacific region.
To fight impact on RE imports, India to set up renewable manufacturing units and export services hubs
India has decided to set up solar manufacturing units and export services hubs to minimise the impact of coronavirus on solar import supplies. The government wants all states and ports to identify 50 to 500 acres of land to set up the factories and export service hubs. Companies planning to expand manufacturing and export services in India will be fully backed by the ministry of new and renewable energy (MNRE), the government said. The ministry has also extended the March 31 deadline for approvals for models and manufacturers by six months.
RE sector to get hurt by prolonged lockdown?
Prolonged lockdown will hurt RE generation and increase risk of curtailment by states. Analysts said RE developers will continue to face payment issues from discoms because the 25% fall in power demand will cause discoms a loss of $12. CRISIL expects 3GW to 4GW of projects to get delayed in the next three months as solar supply chains remain disrupted. Exodus of labour will worsen the situation. New projects could head to financial closure and delays in loan payments will impact RE lendings. Experts said currency depreciation is hurting investments, which is why Foreign Institutional Investors are retreating.
The worst hit from lockdowns are small rooftop solar players. According to reports, about 25% of rooftop installation is accounted for by 10-12 leading players. Experts say it is likely the current lockdown may force small firms to go bankrupt or exit the business altogether as they lack financial capacity to bear the losses and they are unlikely to get aid from the government or banks, ET reported.
Tariff ceilings gone, India’s RE sector may see boost by 7GW: Study
India’s removal of tariff ceilings from RE tenders will boost investments and project pipeline by 7GW, ratings agency CRISIL said. RE capacity had dropped to 9GW in FY19 from 12GW in FY18, and it remained subdued in FY20, the agency said.
With ceilings gone CRISIS expects a boost of 6 GW to 7 GW over the medium term. Experts said solar energy companies will now have room to factor in higher risks of low irradiance and execution hurdles, but positive impact can only be expected after COVID-19 pandemic is over.
Covid19: Global solar PV installation to drop 18% in 2020, says Woodmac
According to Wood Mackenzie, global solar PV installations are expected to drop by 18%, from 129.5 GW to 106.4 GW in 2020, amid lockdowns in several countries. Experts said the pandemic and current crash in oil prices is pushing the world into recession in 2020. Analysts said even if economies revive in 2021, the projects that are supposed to deliver then are being developed now. If recession hits, things won’t go as planned. The consultancy firm reduced the 2021 solar PV forecast by 3% from 127.2 GW to 123.6 GW. Woodmac said the recession won’t impact China where the recovery is already underway, work at project sites and manufacturing of solar wafers, cells and modules has resumed. Chinese PV market won’t be affected till August 2020, experts said.
Under-implementation solar projects in India worst hit, says report
Care Ratings latest report said solar projects that are under implementation will be worst hit by the pandemic as solar imports come from China. The report said solar developers will miss deadlines as their execution schedule, which usually happens in the last quarter of the financial year, has coincided with the spread of the virus and the lockdowns. This will impact the installation in the first half of the next financial year 2020-21. Analysts said solar module prices are likely to rise because of the depreciation of Indian currency. The agency warned payments from discoms may get delayed that would lead to liquidity stress on the projects.
REC Ltd sets up SPVs for solar transmission projects in 4 states
Public infrastructure company, active in India’s power sector, REC Limited has approved the incorporation of seven Special Purpose Vehicles (SPVs) to develop solar energy transmission projects in Karnataka, Maharashtra, Rajasthan and Madhya Pradesh. The decision comes following a request for proposals to set up seven projects in the above states on a build, own, operate, and maintain basis.
IREDA given charge of solar projects that require VGF funds
The Ministry of New and Renewable Energy (MNRE) has notified amendments regarding the setting up of 12GW of solar projects planned with Viability Gap Funding (VGF) support. A big change that has been ushered is the transfer of charge of VGF projects from SECI to IREDA. The VGF is provided with an objective to cover the difference between the domestically produced solar cells and modules and imported solar cells and modules. The cap has currently been set at ₹7 million (~$92,288)/MW while the actual VGF will be decided through bidding. The total project cost of the 12 GW solar projects under this program is estimated to be ₹480 billion (~$6.33 billion).
China finalizes $214 million 2020 solar subsidy policy, budget slashed by 50%
China has announced a $214 million subsidy for PV in 2020. One-third of that is allocated for residential rooftop PV and the rest for bidding projects, including distributed PV and utility PV projects. Compared with last year, the subsidy budget was slashed by 50%, PV-magazine reported. China has introduced guided feed-in prices for different types of electricity and finalised its subsidy policy two months earlier than last year.
PV market participants will have to submit all planned projects by June 15 to NEA’s provincial branches to be considered in the central government’s bidding system operation. Residential PV does not need bidding and can start construction immediately. Experts said the developers will have eight months, plenty of time, to finish by the end of this year.