Wood Mackenzie reports on India’s renewables market

Wood Mackenzie principal analyst Robert Liew commented, “The timing of the lockdown is unfortunate as Q1 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.

With over 3 GW of wind projects under construction scheduled for 2020 completion, supply and labour disruptions from the current lockdown could delay 400 MW into 2021, equating to a downgrade of 11% for 2020.

Wood Mackenzie stated that 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% of total volume) which has been disrupted due to the coronavirus.

Senior analyst Rishab Shrestha commented, “Current supply and labour disruptions will have an outsized negative impact on 2020 installations. 1Q2020 is expected to be strongly impacted with a potential 60% y/y quarterly downgrade, or 1.2 GW, down from about 3 GW in 1Q2019.

“We remain cautious on the outlook for the second half of the year as supply and logistics bottlenecks linger. Consequently, our full year downgrade stands at 2.9 GW, a 24.8% reduction resulting in a revised 2020 outlook of 8.9 GW of solar PV installations.”

Unfortunately, the Indian states with the highest coronavirus infection rates also correspond with the areas that are favourable to wind and solar development.

The state of Gujarat delivered 58% or 1.4 GW of new added wind capacity in India in 2019, and unfortunately, stands as one of the top ten worst hit states in terms of coronavirus infections, according to Wood Mackenzie.

On the solar front, that the states of Karnataka (2.0 GW), Tamil Nadu (1.6 GW) and Rajasthan (1.7 GW) were the top three states accounting for 55% of solar PV installations in 2019. All of which are in the top ten worst hit states.

Both 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. 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.

Read the article online at: https://www.energyglobal.com/solar/06042020/wood-mackenzie-reports-on-lockdown-and-indias-renewables-market/