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Coronavirus scars solar power industry; Q3 capacity addition falls 80% year-on-year

However, there are signs of recovery ahead with a robust large-scale solar project development pipeline of 44.7 GW, with another 34.6 GW of projects tendered and pending auction at the end of Q3 2020

twitter-logoPB Jayakumar | November 23, 2020 | Updated 16:03 IST
Coronavirus scars solar power industry; Q3 capacity addition falls 80% year-on-year
India's new solar installations fell by 80% year-over-year (YoY) to 438 megawatts (MW) of solar capacity in Q3 2020 from 2,177 MW added in Q3 2019

India's new solar installations fell by 80% year-over-year (YoY) to 438 megawatts (MW) of solar capacity in Q3 2020 from 2,177 MW added in Q3 2019. In the first nine months of 2020, the installed capacity totalled 1.73 gigawatts (GW), a 68% decline compared to 5.48 GW added in the same period of 2019. However, tiding over the lockdown blues, the addition is a 114% increase compared to 205 MW installed in the previous quarter, says Mercom Capital Group, which tracks the renewable energy industry worldwide.

According to the company's report, several project deadlines have moved to Q4 2020, and the commissioning dates for a large number of projects have been postponed to the first half of 2021. However, the country's solar industry is showing signs of recovery with increased activity compared to the previous quarter.

Also Read: No guaranteed takers for Adani Group's $6 billion solar project in India

"The solar industry in India is glad to see the back of 2020, which will end up as one of the worst years for solar in India as COVID-19 took a heavy toll on the industry. However, the market is almost back on its feet and the mood is upbeat as the industry heads to 2021 - one of the best years forecasted for the sector," says Raj Prabhu, CEO of Mercom Capital Group.

The report further states that India still has a robust large-scale solar project development pipeline of 44.7 GW, with another 34.6 GW of projects tendered and pending auction at the end of Q3 2020. The worst seems to be over for the rooftop market, and installers are reporting intense competition.

Mercom India Research forecasts approximately 3.3 GW of solar installations in 2020 as most of the projects scheduled for commissioning in the second half of 2020 were moved to the first half of 2021.

The report noted that large-scale installations totalled 283 MW compared to 120 MW in the previous quarter. YoY, large-scale installation levels decreased by 85% compared to 1,932 MW installed in Q3 2019. Rooftop solar installations accounted for 155 MW in Q3 2020, an increase of 82% compared to 85 MW installed in Q2 2020. Rooftop installations declined 37% Y-o-Y compared to the 245 MW added in Q3 2019. The commercial and industrial (C&I) segment dominated the Indian solar rooftop market in Q3 2020 and accounted for a 95% market share.

Also Read: India exceeding Paris targets; to achieve 450 GW renewable energy by 2030: PM Modi at G20 summit

"There are some short-term risks it has to deal with, like the uncertainty around basic customs duty (BCD), DISCOM dues, and the difficulty in getting power sale agreements signed," says Prabhu.

Although more than 75% of labour shortage issues have been resolved, the country is still facing some manpower shortages as workers fear travel risks, even though the restrictions have been lifted. In the near term, there could be some supply disruptions and a shortage of solar components.

Because of solar glass paucity and the anticipated demand rush in China in Q4 to meet the year-end goals, developers are experiencing module shortages along with their prices firming up. The module scarcity and upward pressure on pricing could linger into Q2 2021.

Also Read: Few takers for solar power tender of railways, bid deadline extended till Nov 25

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