India installed just 205MW of solar capacity in the second quarter of 2020, down 86% year-on-year, according to a new report from research and consulting firm Mercom India Research.
As COVID-related disruptions derailed project construction, Q2 2020 recorded the lowest number in terms of quarterly solar installations since Q3 2014.
Large-scale installations were the worst affected, down 90% year-on-year to 120MW. However, Mercom said that with 41.7GW large-scale projects currently under development, the industry has “a glimmer of hope for recovery”. There are also another 32.4GW of projects tendered and awaiting auction.
Overall power capacity additions in India in the first half of 2020 stood at 2.3GW, with solar accounting for 56% of these installations.
Mercom India Research is forecasting approximately 4GW of solar to be added in 2020, which was the worst-case scenario laid out in out its previous report.
Project commissioning schedules were thrown into turmoil when India’s government’s ordered a strict lockdown between 25 March and 20 April. Consultancy Bridge to India said much of the turbulence in the industry earlier this year was due to equipment and labour constraints. The country sources as estimated 80% of its solar modules from China.
In a move to support domestic manufacturers, the Indian government last month extended its safeguard duty on the import of solar cells and modules to India for another year.
India’s Ministry of Finance announced a duty of 14.9% to 28 January 2021, when it will reduce to 14.5% until 29 July 2021. The duty is levied on all solar cells and modules imported from China, Thailand and Vietnam, but the notification made no mention of Malaysia.
Consultancy JMK Research & Analytics said the safeguard duty extension may have resulted in the “aggressive” tariffs seen in a recent auction for 1.2GW of solar projects in India. The reverse auction saw winning tariffs of INR2.43/kWh (US$0.0324).
Renewable projects granted deadline extension
As a result of the disruption caused by COVID-19, India’s government on Thursday announced that renewable energy projects currently under construction will get a five-month extension for meeting their deadlines for completion.
The Ministry of New and Renewable Energy said the extension “will be given without case-to-case examination and no documents/evidence will be asked for such extension”. The relief is available for renewable projects disrupted between 25 March and 24 August 2020.
Project developers may also pass on the benefit of the extension to other stakeholders down the value chain, such as engineering procurement construction contractors and equipment suppliers.