As per the industry analysts, “The recent surge in COVID-19 cases all across the country has pushed several states under curfews and lockdowns, which is expected to result in project commissioning delays for solar projects.”
According to the Founder of JMK Research, Mrs. Jyoti Gulia, “If the government grants solar developers another three to four-month extension, an estimated 4 gigawatt (GW) of solar and wind projects with planned commissioning in 2021 will be delayed and will be expected to get commissioned in 2022.”
Further, she added, “There will again be a delay in the project commissioning schedule for utility-scale solar projects because of lack of labor, and delay in equipment supply due to lockdown in different states… The rooftop market will again face payment issues for open projects with the uncertainty looming over full or partial closure of manufacturing and business units which might also add to liquidity crunch woes.”
Earlier this month, the solar industry body National Solar Energy Federation of India (NSEFI), had requested a three-month blanket extension over the scheduled commissioning date and for financial closure on the execution of the current projects until stability in module prices and steel prices was observed.
the NSEFI letter had stated in its letter, “Given the surge, availability of manpower, managing supply chain logistics, etc, is becoming a severe challenge, akin to the first wave. Since the solar industry is already bearing the delayed deliveries, delayed BIS approvals, due to COVID-19 induced slowdowns leading to financial hardships for developers.”
The ministry issued an order issued on March 30 that the total extension provided by the implementing agencies on Covid-19’s account should not exceed 6 months in any case, including the 5-month blanket extension received in August 2020 Is included. Requires more than 6 months, the agency will have to justify it to MNRE.
Vinay Rustagi, who is the managing director at renewable energy consultancy Bridge to India, said “The situation is really grim and significantly worse than last year… The conservative view is that the slowdown will amount to a loss of 3-4 months of business activity. Profitability across the value chain is also coming under severe pressure due to additional costs and delays.
things might worsen further depending on when the pandemic starts coming under control. Regarding discoms, Vibhuti Garg, energy economist, Lead India, Institute for Energy Economics and Financial Analysis (IEEFA) told ETEnergyWorld that they will struggle to make payments to RE generators and like last time, the government will have to pump in more money to address the issue.”
Mrs. Gargi stated over the pandemic situation, “Lot of migrant laborers have started going back to their hometowns… Renewable power projects in such states will suffer and the government will have to give another extension and not impose any penalty for not delivering projects on time.”
Srivatsan Iyer, chief executive officer, Hero Future Energies, stated also over this situation, “With the recent surge in COVID-19 cases, we expect a recurrence of last year’s issue with the migration of laborers, albeit, at a potentially lower level. So far, we do not anticipate any adverse impact on any of our current operations, as we maintained our daily operations during the previous surge of COVID cases.”
“Very recently, we have doubled our production capacity at our Haridwar facility. Since we’re not facing any lack of demand, we don’t have to think about pay cuts or layoffs that trigger the migration of workers, especially those working on daily wages,” said Gautam Mohanka, managing director, Gautam Solar.
According to analysts, this year will not be any different and the sector would continue to see a high level of M&A and funding activity despite COVID-19 because of the global thrust on renewables, investors’ comfort in bankable power purchase agreements and India’s experience in setting up sizable projects.
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