The timing of the lockdown is unfortunate as the first quarter is typically one of the busiest periods for wind project installations.
New Delhi: India could face over 21.6 per cent or 3 Digawatts (GW) of solar photovoltaic (PV) and wind installations being delayed as a result of the country’s lockdown, according to Wood Mackenzie.
The research and consultancy firm said in a statement the timing of the lockdown is unfortunate as the first quarter 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,” principal analyst Robert Liew said.
With over 3 GW of wind projects under construction scheduled for 2020 completion, supply and labour disruptions from the current lockdown could delay 400 megawatts (MW) into 2021, equating to a downgrade of 11 per cent for 2020.
Similar to the wind sector, India’s solar PV installations are expected to be hit hard as the industry is heavily dependent on Chinese PV module imports — 80 per cent of total volume — which has been disrupted due to the coronavirus.
“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,” senior analyst Rishab Shrestha said.
Wood Mac remains cautious on the outlook for the second half of the year as supply and logistics bottlenecks linger. Consequently, its full year downgrade stands at 2.9 GW, a 24.8 per cent reduction resulting in a revised 2020 outlook of 8.9 GW of solar PV installations.
The Indian states with the highest coronavirus infection rates also correspond with the areas that are favourable to wind and solar development. Gujarat delivered 58 per cent or 1.4 GW of new added wind capacity in India in 2019, and stands as one of the top ten worst-hit states in terms of coronavirus infections.
On the solar front, Karnataka (2.0 GW), Tamil Nadu (1.6 GW) and Rajasthan (1.7 GW) were the top three states accounting for 55 per cent of solar PV installations in 2019. All of which are in the top ten worst-hit states.
“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,” WoodMac said.
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.