COVID-19 Steered the Dramatic Fall in Funding, Solar Capital Cost: IEEFA Report

“For solar, the tariff required is a direct function of the solar resource, the capital cost of installation, and the required rate of return for debt,” said Buckley in a recently published note

June 09, 2020. By News Bureau

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One of the most germane impacts of the COVID-19 pandemic has been the fall of interest rates in the global developed markets, according to Tim Buckley, director of energy finance studies South Asia at the Institute for Energy Economics and Financial Analysis (IEEFA).

“For solar, the tariff required is a direct function of the solar resource, the capital cost of installation, and the required rate of return for debt,” said Buckley in a recently published note.

He further that with dramatic falls in the capital cost of solar -- driven by a 20 per cent fall in solar module costs in the last year -- and in the cost of funding, the two most important inputs into the solar tariff have fallen hugely relative to even two years ago.

IEEFA further said that renewable energy continued to break records despite the impact of COVID-19 pandemic in April and May.

“Despite, or maybe in acknowledgement of, the global pandemic, April and May 2020 have seen global momentum toward energy transition continue apace,” said Buckley.

According to IEEFA, as renewable and battery costs continue to decline, there would be increased risks in stranded thermal assets.

It added that available capital has continued to restrict, with six new or tightened coal exit policies announced by globally significant financial institutions over April to May, taking the 2020 to-date tally to 37 announcements.

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