COVID-19: India to add only 5,000 MW solar capacity in 2020, says report

With project timelines getting extended due to the COVID-19 pandemic, India is expected to add only 5,000 MW of solar capacity in 2020, nearly 32 per cent lower than last year, a report has said.

India added 1,080 MW solar capacity in the first quarter of 2020, which is the lowest in a quarter since October-December (Q4) 2016, industry tracker Mercom said in a report.

Solar installations during the January-March quarter were down 39 per cent as compared to 1,761 MW added in the corresponding period last year.

The country added 7,346 MW solar capacity in 2019.

"The lockdown in the country disrupted the supply chain, lowered power demand, resulted in currency fluctuations making component costs unpredictable, and has exacerbated the liquidity issues," Mercom Capital Group Chief Executive Raj Prabhu said.

"We are cutting our solar demand forecast by about 40 per cent from our previous estimates based on the COVID effect on the market," he added.

The agency, which had earlier projected a capacity addition of 8,500 MW during 2020, expects solar installations to reach nearly 5,000 MW as project timelines are extended and moved to 2021.

According to the report, large-scale solar project development pipeline stands at 36.9 GW, with 38.8 GW of projects tendered and pending auction at the end of Q1 2020.

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Large-scale projects totalled 886 MW of the 1,080 MW solar capacity added in Q1, while rooftop solar installations added up to 194 MW.

The report noted that the nationwide lockdown due to the coronavirus pandemic since March 25, 2020, and the supply disruption caused by the shutdown in China resulted in a decline in solar installation in Q1 2020.

"As the market gets ready to open back up, we can expect to see shortages, resulting in an increase in labour and component costs in the near-term. The next couple of months are critical, and any further extensions could mean further reductions in our forecast," Prabhu said.

Also, with no domestic module and cell manufacturing capacity getting added during the year, the supply of components from China will be critical.

"Components shipping from China has yet to resume. Logistical issues are preventing goods from reaching project sites. Labour issues are also looming; most of the companies do not have the labour force to begin construction or production right away," the report stated.

Cumulative solar installations reached 36.8 GW at the end of Q1 2020.

Of these, large-scale projects accounted for 32.2 GW, whereas rooftop solar installations accounted for 4.6 GW, according to the report.