The recent surge in COVID-19 cases across the country has pushed several states under curfews and lockdowns, which is expected to result in project commissioning delays for solar projects, according to industry analysts.<\/p>\n
According to Jyoti Gulia, founder, JMK Research, if the government grants solar developers another three to four month extension, an estimated 4 gigawatt (GW) of solar and wind projects with planned commissioning in 2021 will be delayed and will be expected to get commissioned in 2022.<\/p>\n
\u201cThere will again be a delay in the project commissioning schedule for utility-scale solar projects because of lack of labour, and delay in equipment supply due to lockdown in different states\u2026 Rooftop market will again face payment issues for opex projects with the uncertainty looming over full or partial closure of manufacturing and business units which might also add to liquidity crunch woes,\u201d said Gulia.<\/p>\n
Solar developers have already asked for a three to four month blanket extension from the Ministry of New and Renewable Energy (MNRE) owing to disruptions in labour and supply chain as a result of the ongoing wave of COVID-19 infections.<\/p>\n
Earlier this month, solar industry body National Solar Energy Federation of India (NSEFI), had requested for a three-month blanket extension over scheduled commissioning date and for financial closure on the execution of the current projects until a stability in module prices and steel prices was observed.<\/p>\n
\u201cGiven the surge, availability of manpower, managing supply chain logistics, etc, is becoming a severe challenge, akin to the first wave. Since the solar industry is already bearing the delayed deliveries, delayed BIS approvals, due to COVID-19 induced slowdowns leading to financial hardships for developers,\u201d the NSEFI letter had stated in its letter.<\/p>\n
The ministry had clarified through an order issued on 30 March that the total extension provided by implementing agencies on account of Covid-19 should in no case be more than 6 months including the 5-month blanket extension given in August 2020. In case an extension beyond 6-months is required, the agency will have to justify it to MNRE.<\/p>\n
In August 2020, the renewable energy ministry had granted a five-month blanket extension to all ongoing projects to deal with disruptions caused by the lockdown.<\/p>\n
Industry analysts said that every aspect of project development activity including site preparation, engineering, financing, procurement and construction is being hit because of the far greater spread of infection.<\/p>\n
\u201cThe situation is really grim and significantly worse than last year… The conservative view is that the slowdown will amount to a loss of 3-4 months of business activity. Profitability across the value chain is also coming under severe pressure due to additional costs and delays,\u201d said Vinay Rustagi, managing director at renewable energy consultancy Bridge to India.<\/p>\n
He added that things might worsen further depending on when the pandemic starts coming under control. Regarding discoms, Vibhuti Garg, energy economist, Lead India, Institute for Energy Economics and Financial Analysis (IEEFA) told ETEnergyWorld that they will struggle to make payments to RE generators and like last time, the government will have to pump in more money to address the issue.<\/p>\n
She also said that the ongoing situation might also hit the government\u2019s objective of promoting domestic manufacturing at this stage.<\/p>\n
While the Central government has requested states not to impose full lockdown but containment of zones, the given pace at which the infection is spreading this time states are left with no option but to announce lockdowns resulting in reverse migration of labourers which has come as a grim reminder of previous year conditions.<\/p>\n
\u201cLot of migrant labourers have started going back to their hometowns… Renewable power projects in such states will suffer and the government will have to give another extension and not impose any penalty for not delivering projects on time,\u201d said Garg.<\/p>\n
According to industry executives, they are either not facing any crisis at present caused by reverse migration of labour or expect a rather lower level of impact in future.<\/p>\n
\u201cWith the recent surge in COVID-19 cases, we expect a recurrence of last year\u2019s issue with migration of labourers, albeit, at a potentially lower level. So far, we do not anticipate any adverse impact on any of our current operations, as we maintained our daily operations during the previous surge of COVID cases,\u201d said Srivatsan Iyer, chief executive officer, Hero Future Energies.<\/p>\n
He said that at their Bhadla solar park project site in Rajasthan, they have been mobilising efforts to facilitate a safe working environment for onsite employees and contract workers.<\/p>\n
\u201cThe vaccination drive for all employees is underway, and for contract labourers has been recently initiated at a few of our operational sites, and we aim to cover all our sites at the earliest,\u201d added Iyer.<\/p>\n
However, for Gautam Solar, a Delhi-based solar manufacturer of components for the entire value chain of distributed solar, they are currently not facing any migration crisis.<\/p>\n
\u201cVery recently, we have doubled our production capacity at our Haridwar facility. Since we\u2019re not facing any lack of demand, we don\u2019t have to think about pay cuts or layoffs that trigger the migration of workers, especially those working on daily wages,\u201d said Gautam Mohanka, managing director, Gautam Solar.<\/p>\n
Since last year, India\u2019s renewable energy sector has seen a heightened pace of merger and acquisition (M&A) activity despite the coronavirus pandemic that has taken a toll on the economy.<\/p>\n
In November 2020, ETEnergyWorld in its report had said that M&A transactions of about $2 billion took place in 2020, a 75 per cent jump from transaction volumes estimated at $1.2 billion in 2019, according to one estimate. While the total deal value of transactions in 2020 stood at about $4 billion, according to another estimate.<\/p>\n
According to analysts, this year will not be any different and the sector would continue to see a high level of M&A and funding activity despite COVID-19 because of the global thrust on renewables, investors\u2019 comfort in bankable power purchase agreements and India\u2019s experience in setting up sizable projects.<\/p>\n
\u201cWe continue to see interest from three categories of investors \u2013 purely financial investors, global IPPs and utilities and oil and gas majors. Deals are getting consummated across the business lifecycle — from investments in greenfield projects to acquisition of commissioned assets to funding of growth platforms,\u201d said Srishti Ahuja, Partner \u2013 strategy and transactions, power and utilities practice, EY India.<\/p>\n
She added that the sector has also seen its first special purpose acquisition company transaction, a series of successful green-bonds and a variety of new deal structures, though a successful InvIT still eludes the sector.<\/p>\n","protected":false},"excerpt":{"rendered":"
The recent surge in COVID-19 cases across the country has pushed several states under curfews and lockdowns, which is expected to result in project commissioning delays for solar projects, according to industry analysts. According to Jyoti Gulia, founder, JMK Research, if the government grants solar developers another three to four month extension, an estimated 4 gigawatt (GW) of solar and wind projects with planned commissioning in 2021 will be delayed and will be expected to get commissioned in 2022. \u201cThere will again be a delay in the project commissioning schedule for utility-scale solar projects because of lack of labour, and […]<\/p>\n","protected":false},"author":39,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[132],"tags":[],"class_list":["post-412576","post","type-post","status-publish","format-standard","hentry","category-power"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/412576","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/39"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=412576"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/412576\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=412576"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=412576"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=412576"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}