Coronavirus: The Green Energy Sector In India Faces The Heat

According to the latest data by CRISIL, Coronavirus may impact India’s green energy growth. It has mentioned that Coronavirus if prolonged, may impact around 3 giga watt (GW) of solar projects, worth ₹16,000 crores, could be at risk of penalties for missing their project completion deadline

February 18, 2020. By Darshana Daga

According to latest data by CRISIL, Coronavirus may impact India’s green energy growth. It has mentioned that, Coronavirus if prolonged, may impact around 3 GW of solar projects, worth ₹16,000 crore, could be at risk of penalties for missing their project completion deadline.

CRISIL in its report said that, “As per the standard terms of power purchase agreements, non-adherence to completion timelines attracts penalties, including downward renegotiation of tariffs.”

Indian companies supplying solar panels are reeling under impact of Coronavirus post shut down of manufacturing units in China and rise in prices of solat equipements. Chinese vendors have alerted about delays in production and transport of the component due to outbreak.

The CRISIL statement further said that, “CRISIL understands that measures such as restricted movement of people and/ or shut down of factories have disrupted module manufacturing in China and its feeder industries. The clampdown has forced several manufacturers to run their plants at low utilisation, or to stall operations altogether. Indeed, even the modules already manufactured are facing delays in transit to project sites on account of precautionary restrictions on transit at ports," the statement said.

Given their competetive pricing, Chinese companies account for major supplyer of solar components to indian markets. “In a bid to meet the commissioning timelines, the developers may choose to implement projects with more expensive modules sourced from locations other than China. But this could erode returns as the modules may be 15-20% costlier, shaving as much as three percentage points off their returns," the CRISIL statement said.

Global firms like Hanwha Solutions hve had to shut down plants in South Korea. The statement from Hanwha says ” Given the ongoing uncertainty caused by the Coronavirus outbreak, Hanwha Solutions Corporation has taken measures to temporarily shut down solar module manufacturing activity at its two production facilities in South Korea. The Jincheon Factory will pause production between February 12 and February 23, with plans to partially restart some operation between February 17-20, depending upon the supply of some raw materials. The Eumsung factory will pause production between February 18 and February 23.”

Panels, inverters, mounting structures, wires, nut and bolts; all these constitute 90 per cent of solar gear imports. It mainly comes from China, Malaysia, and Taiwan. In China, the main sourcing point is Wuhan, where the coronavirus originated. 

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