COVID19 IMPACT ON INVESTOR SENTIMENTS FOR INDIAN SOLAR PROJECTS

The renewable industry is facing numerous challenges and limitations, due to the COVID-19 outbreak. All the solar projects in the country have been halted and industry is concerned about the delays in completion of their solar projects The Corona virus outbreak that has halted economic activity in China, a major global supplier of solar cells and modules and also has impacted the solar power industry hard through supply chain disruptions. The other major challenges that the industry is facing is raising capital and mobilizing manpower to manage assets to maintain the guaranteed generation levels. Fortunately, the Indian government has provided relief by infusing much needed liquidity in the market and addressing other development related challenges. Looking at the positives, the government is aggressively encouraging local manufactures of the solar products so as to be self reliant. Hopefully the companies will decide to go for more locally manufactured Modules, inverters and other components and this will also create additional demand from the existing market itself. Advantages of the savings high cost of power generation bills will also be realised, hence acceraratelting the growth of the solar industry specially C&I and rooftop solar. Let us understand what our experts feel about the COVID-19 impact on the investments in the solar industry.

With India under lockdown due to Covid 19 and economic activities coming to a complete halt, power demand reduced drastically. This resulted in lower dispatch of electricity from the power plants. Further, the billing and collection of distribution companies were badly hit, thereby reducing their ability to make timely payment to power generators.

In terms of investments of roof-top solar projects, I believe many industries and commercial establishments that are planning to devote CAPEX for their captive consumption will delay these expenses now. The aim of every company today is to conserve cash at all cost and solar, though a great cost-saving instrument, burns a hole in the pocket due to high initial CAPEX. We should see these projects delayed by at least eight to twelve months.

COVID-19 has pushed the world economy into unprecedented times, the impact of which has been and will be highly unpredictable and unquantifiable. However, the past few months have brought about some clear patterns in which the consumer will be expected to behave in the coming few quarters. This behaviour will mainly be characterized by a knee jerk reaction to the loss of incomes, exponential rise in overheads, fear of uncertainty, and lack of cash flows. The impact of these in the short term is going to halt or deferment plans by MSMEs, Individuals, and Proprietary firms to go solar, impacting widely the CAPEX segment of the C&I business.

It is a mixed bag for IPPs selling to private consumers. Most are facing a reduced demand/ off-take and uncertainty from commercial establishments. Commercial off-takers like office complexes and shopping complexes face an uncertain future demand and occupancy rates. However, we should see demand growth from industries that are now forced to look at reducing operating expenses.