India could see over 21.6% or 3 GW of solar and wind installations being delayed with supply and labour disruptions caused due to the current lockdown—according to a new report by Wood Mackenzie.
The analyst expects annual solar installation to fall by 2.9 GW—a 24.8% reduction—resulting in 2020 outlook being revised to 8.9 GW. In wind sector 400 MW capacity addition could get delayed into 2021, equating to a downgrade of 11% in 2020 installation.
Unfortunately, the Indian states with high solar and wind potential have reported the highest coronavirus infection rates.
On the solar front, the states of Karnataka (2.0 GW), Tamil Nadu (1.6 GW) and Rajasthan (1.7 GW)—which together accounted for 55% of solar PV installations in 2019—are among the top ten worst hit states.
The state of Gujarat, which delivered 58% or 1.4 GW of new added wind capacity in 2019, is also one of the top ten worst hit states by coronavirus infections.
India’s solar PV installations shall be hit hard as the industry is heavily dependent on Chinese PV module imports (80% of total volume) which has been disrupted due to the coronavirus.
Senior analyst Rishab Shrestha said: “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.
“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.”
Wood Mackenzie principal analyst Robert Liew said: “The timing of the lockdown is unfortunate as Q1 is typically one of the busiest periods for wind project installations. The lockdown will delay some projects until summer, and if the lockdown is extended past April, wind farm construction could be further delayed into the monsoon season, where wind installations are typically at their lowest.”
With over 3 GW of wind projects under construction scheduled for 2020 completion, supply and labour disruptions from the current lockdown could delay 400 MW into 2021, equating to a downgrade of 11% for 2020.
Impact on cash flows
Both analysts agree that current support measures by the government to mitigate the downturn are warranted, but if the virus situation continues to escalate and the lockdown is extended, there will be severe financial impact on utility companies. Consequently, solar PV and wind installation developers’ cash flows will also be affected, and corporate bank loans for new project development could slow to a trickle.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: firstname.lastname@example.org.