The COVID-19 pandemic has caused several operational and financial setbacks bringing down solar capacity addition estimates by 20 per cent to about 105 GW for 2020 from the previous forecast of 130-135 GW, according to the latest report by Bridge to India.
Apart from the pandemic crisis, there were many other short to mid-term implications for the sector, the clean energy consultancy said.
These included fall in fossil fuel and conventional power prices posing viability risk to grid parity-based projects, deteriorating financial condition of utilities, higher offtake risk for power producers, and disruption in construction activity resulting in higher costs and potentially lower revenues.
It added that other reasons were delay in government procurement programmes, a sharp downturn in end consumer-driven markets, pressure on smaller equipment manufacturers, risk of growing trade barriers, and constrained financing.
The pandemic has refocused the attention of governments and policymakers to fight climate change and localise energy supply.
“Both these priorities play to solar technology’s advantage. Investors in conventional energy are expected to accelerate the shift towards renewable energy,” said the report titled ‘COVID-19: Impact on the global solar market’.
According to the report, while designing economic stimulus packages, the governments need to consider long-term structural benefits such as energy access, job creation, reducing emissions, and technology innovation.
The clean energy consultancy added that the focus should be on reducing risks especially for small developers and ensuring financing support for the highly vulnerable distributed solar market. And added that adequate access to low-cost debt and other financing mechanisms should be ensured for emerging markets to maintain growth momentum in the sector.
Source: Economic Times