Coronavirus scare: Sales volumes for domestic solar module OEMs to be impacted in Q4 FY20
Domestic solar module OEMs to remain affected, given the dependency on China for sourcing of key components
New Delhi: With the coronavirus scare gaining ground, the sales volumes for domestic solar developers as well as module original equipment manufacturers (OEMs) are likely to be impacted in the fourth quarter of financial year 2019-20 and the near-term, said research agency ICRA.
“Further, solar photovoltaic (PV) module price levels may spike in the near-term from the current level — ranging between 20-21 cents per watt — putting an upward pressure on expected bid tariffs. As a result, de-risking strategy so as to identify and ensure the alternate supply chain other than China in the long run would be critical for domestic IPPs/OEMs,” said Sabyasachi Majumdar, group head and senior vice-president – corporate ratings, ICRA.
He added that given the import dependency on China for sourcing of PV modules, the execution timelines for the ongoing utility scale and rooftop solar projects are likely to be affected with delays in the delivery of PV modules.
“This was due to the ongoing disruption in supply chain for sourcing of modules and cells and the still uncertainty over the timelines for normalcy in the manufacturing operations in China for solar OEMs,” Majumdar added.
According to CRISIL, with the anticipated execution risk due to coronavirus, ability to ensure timeline extension as per power purchase agreement terms from the nodal agencies also remains important.
“With these ongoing challenges, there has already been a slowdown in tendering of wind and solar PV projects by 25 per cent to 8.6 gigawatt (GW) in 2019 from 11.5 GW in 2018. This may further affect the tendering process and project awards in the current calendar year, given the fact that the resolution of issues on tariff renegotiation as well as grid curtailments by state utilities in Andhra Pradesh is still pending,” it added.
CRISIL said that timely resolution of these issues, both by the regulatory bodies and judiciary authorities, remains utmost important and a key monitorable. And this will restore investors’ confidence, given the large funding requirements in the renewables segment and policy focus from the government.
Source: ICRA / CRISIL
