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Coronavirus outbreak likely to disrupt supply for solar energy sector: ICRA
Feb-25-2020

Given the import dependency on China for sourcing of PV (photovoltaic) modules, ICRA’s Group Head & Senior Vice President - Corporate ratings -- Sabyasachi Majumdar has said the execution timelines for the ongoing utility scale/roof-top solar projects may be affected with delays in the delivery of PV modules. For domestic module manufacturers/OEMs, he said sales volumes are likely to be impacted in last quarter of FY20 and in the near term, given this uncertainty. Solar PV module price levels may spike in the near term from the current level ranging between 20-21 cents/watt putting an upward pressure on expected bid tariffs.

Ratings agency ICRA said that the COVID-19 (coronavirus disease) outbreak in China has posed one more concern for both domestic solar developers/IPPs as well as module original equipment manufacturers (OEMs), due to ongoing disruption in the supply chain for key components used for manufacturing of solar modules. It mentioned that this development could potentially play spoilsport in the near term. The sector is already facing several headwinds due to issues such as long delays in making payments by state distribution utilities, execution in delays for projects bid out over the past two years due to challenges in land acquisition and securing transmission connectivity and financing in a timely manner.

There is already a slowdown in tendering of wind and solar PV projects by 25 per cent to 8.6 GW in 2019 from 11.5 GW in 2018. The agency said that the ongoing challenge may further affect the tendering process and project awards in the current calendar year, given the fact that the resolution of issues on tariff renegotiation as well as grid curtailments by state utilities in Andhra Pradesh is still pending.

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