India’s renewables installations could fall by a fifth due to COVID-19 lockdown

The report: Coronavirus: Timeout for India's renewable energy sector points to labour and supply chain disruptions as leading factors in the delay. Lockdown measures in the country could delay 400 MW of wind power projects into 2021, equating to a downgrade of 11% for 2020.

Solar PV installations are expected to be hit hard as well, as 80% of India’s total PV module imports come from China – a supply chain that has been severely disrupted. 

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.’

There are also concerns that, should the lockdown remain in place past April, wind installations will then be pushed into the monsoon season, where installations are typically at their lowest.

The report also finds that the Indian states with the highest coronavirus infection rates also correspond with the areas that are favourable to wind and solar development. Gujarat, which delivered 1.4GW (58%) of India’s new wind capacity in 2019 – along with Karnataka, Tamil Nadu and Rajasthan, which combined accounted for 55% of new solar PV in 2019 – were all in the top ten worst affected states.

The Indian government has granted leniency to renewables projects experiencing problems due to coronavirus, which it is treating as a force majeure event. However, should the virus situation continue to escalate, Wood Mackenzie analysts believe that there will still 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.