Under Implementation Projects Impacted Most by COVID-19: Report

Under implementation solar projects have suffered the biggest impact of the COVID-19 pandemic as solar cells and modules are largely imported from China

Under implementation solar projects have suffered the biggest impact of the COVID-19 pandemic as solar cells and modules are largely imported from China wherein there was lockdown since December 2019, according to credit rating agency Care Ratings. Also, the outbreak has coincided with the actual solar project execution schedule as maximum execution happens in the last quarter of the fiscal year in India.

The report “COVID-19 Impact: Indian Renewable Sector”, further added that when the situation improved in China, India had started facing the problem of a nation-wide lockdown. Accordingly, the implementation of new solar projects was likely to get delayed which could cause developers to miss the completion deadlines.

“Further, the prices of modules are also expected to rise in the short term due to depreciation in the Indian currency which could be slightly offset by excess supply from China due to lower demand. All these are likely to affect the installations in the first half of FY21 and likely to start recovering in the latter part of the year,” the report added.

It is also expected to further impact the future bids till the time situation goes back to normal and power demand improves.

Shifting the focus to the wind sector in the country, the report stated that unlike the solar sector, wind turbines are manufactured in India and accordingly, till the time India announced lockdown, executions were not greatly impacted. However, wind turbine manufacturers have temporarily suspended the production due to the lockdown prevailing in India. Supply and labour disruptions from the current lockdown could delay the project execution in FY21 till the time migrant labours resume work.

The report further added that the Ministry of New and Renewable Energy (MNRE) has already announced that the disruption of supply chain due to the spread of COVID-19 should be considered as a case of natural calamity and Force Majeure Clause may be invoked, wherever considered appropriate and completion timelines may be relaxed. “Such an extension will provide great relief to the developers and will shield them from missing the deadlines, risk of penalties and encashment of bank guarantees.”