Impact Of Covid-19 On The Solar Industry In India
TerraGreen|July 2020
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Impact Of Covid-19 On The Solar Industry In India
India’s solar power sector, like other sectors, is struggling in the wake of the COVID-19 pandemic. In this article, Anita Khuller discusses the challenges that the nationwide lockdown, as a consequence of the coronavirus outbreak, has imposed on the operations of the country’s solar market, power distribution companies, and the overall economy.
Anita Khuller

India installed 7.3 gigawatt (GW) of solar power in 2019 (CY19), consolidating its position as the third largest solar market in the world, according to a study by Mercom Communications India. The report further stated that the country also had a strong pipeline of utility-scale under-development projects of 23.7 GW capacity by end-CY19, with 31.5 GW capacity tenders pending under auctions. Out of this, 7.3 GW, as per the Government of India’s Ministry of New and Renewable Energy (MNRE), about 5.7 GW of new utility-scale solar capacity was added in the financial year (FY) 2019–20, which was 24 per cent less than the 7.5 GW target set for the year. Compared to the previous year’s installations, FY20 installations are also marginally lesser— by about 1 per cent.

To top this slow achievement, the imposition of a nationwide lockdown by the Government of India to control the COVID-19 outbreak, has had a negative impact on the whole economy. There has been an estimated 30 per cent fall in Indian electricity demand during the period from mid-April to May, due to the lockdown of industrial and commercial establishments. Consequently, this has also adversely impacted the revenues and cash collections of the power distribution companies (DISCOMs). Further downside risks may arise from any extension in the lockdown period and any delay in issuance of tariff orders, or inadequate tariffs approved by the state electricity regulatory commissions. This would aggravate the payment delays from DISCOMs to power generation companies (including solar-based projects), which are already reeling under large payment dues of more than ₹920 billion as of February 2020.

Given that the lockdown would also impact project implementation in quarter one (Q1) of FY2021, and assuming normalcy thereafter, the capacity addition in the wind and solar segments together is likely to lower by about 25 per cent to 8 GW against the earlier estimates of 11 GW for FY2021 as per reports.

Far-reaching Effects

Some of the adverse effects faced by all renewable energy, including solar, businesses are—non-availability of resources at the sites, depreciating rupee value (particularly for companies that import components), and banks not operating in many regions, to name a few. The under-construction projects are facing delays in execution because of disruption in the supply chain in India and labour availability, following the lockdown.

The COVID-19 crisis is also impacting the global manufacturing space. Among the various sectors that are bearing the brunt, India’s solar power industry, in particular, is looking at months of delays due to disruption in the supply chain.

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July 2020