New installations in India to remain sluggish in the near term, as wind affected more than solar PV

GlobalData Energy 16 July 2020 (Last Updated July 16th, 2020 16:42)

The Covid-19 outbreak had led to a countrywide lockdown in India towards the conclusion of March 2020, bringing all the construction activities to a halt. Compared to March 2020, the total renewable monthly installed capacity experienced a drop of more than 55% in May 2020. Solar photovoltaic (PV) and wind installation saw a drop of more than 50% during the same time frame. Despite the resumption of renewable projects, the installation activities are not expected to pick up the pace at least for the next few months as the pandemic is unlikely to cease soon.

As per the Ministry of New and Renewable Energy (MNRE), the installed capacity of solar PV and wind during April and May 2020 was 287MW and 12.6MW respectively. With the resumption of construction activities in April 2020, developers were less likely to have accomplished the desired levels of installation due to hindrance in the movement of goods, lack of availability of labour, delays in site inspection, and on-hold approvals, subsequently holding any considerable progress on the project development activities.

Compared to solar PV, the timing of the lockdown has been more unfortunate for the wind sector, as Q1 2020 is typically one of the busiest periods for wind project installations. Delays in the construction of wind projects would lead to installations in the monsoon season, where generally the installations are at their lowest.

Wind has a diverse supply chain, which is more complex compared to solar PV. It has more critical components, more scattered manufacturing compared to solar PV. Hence, it is more likely that the recovery of the sector would also take longer than the latter.

The effects of the Covid-19 have the likely plausibility of reducing the annual wind capacity addition by around 30% over our pre-Covid-19 estimation. We presently estimate a flat growth this year or possibly a decrease of 10% over the 2019 installed capacity. Currently, about 337.5MW wind capacity is already active, another 653.6MW is under construction and is expected to come online by the end of the year. About 2GW is in the permitting phase and might get affected by the onset of the widespread. If about 70-80% of the permitting projects become active, the overall wind addition in India may well be between 2.2-2.6GW this year. The same for solar PV is anticipated to be over 7GW.