Home CATEGORIES Environment Global Wind Day 2020: COVID-19 Impact on Wind Industry in India

Global Wind Day 2020: COVID-19 Impact on Wind Industry in India

Global Wind Day 2020 is significant for the Indian economy, what with India being the 4th largest market for global cumulative wind installations and the 2nd largest wind manufacturing hub in the world.

Global Wind Day 2020

Global Wind Day 2020 is a universal celebration of the local impact of wind energy. Wind has risen up in cost-effectiveness. At INR 2.81/ kWh, wind comes second only to solar as a power source on the grid. It costs nearly 35% less than conventional fuel sources. Wind energy will be one of the key technologies to reduce harmful carbon emissions in India and replace the coal-fired generation which currently dominates the power mix.

How has COVID-19 changed the wind industry?

The impact of the ongoing COVID-19 pandemic may be far-reaching across the wind industry and the wider economy in India and beyond.
Changed outlook for 2020: The impact of COVID-19 will impose a drag on market growth in 2020, due to extended project timelines and supply chain dis-ruptions, compounded by the non-availability of grid and land challenges already impacting installations. Beyond 2020, uncertainty around new tendering and the overall business environment may prolong the impact.
Project timelines extended: All renewable energy projects under construction will be granted an extension of commissioning deadlines, due to the nationwide lockdown imposed on 24 March 2020. The total active pipeline under implementation is around 8.6 GW (gigawatt). Nearly 3 GW of this was scheduled to be commissioned in 2020, 5.2 GW in 2021 and the remaining 0.4 GW in 2022.
2020-2021 installations: A report by the Global Wind Energy Council estimates nearly 0.7-1.1 GW of projects in India which were to be commissioned in 2020 may shift forward to 2021, which shrinks the base forecast much lower. Projects to be commissioned in 2021 may remain on-track, as most have power supply agreements.
New volume at risk: The lockdown is expected to impact new project tendering. A delay in new tenders in 2020 could lower total forecast installations to 11.5-12 GW for the period to 2022, compared to 13 GW projections in the base case. In addition, India was struggling with weak balance sheets of its lending companies before the pandemic – which could now exacerbate the risks to new projects to be tendered in the coming few months or those yet to achieve FID.
Supply chain disruption: Although limited operations and maintenance activities have continued amid the nationwide lockdown, in order to ensure security of supply, the manufacturing of wind power components has been suspended during this time. The Ministry of New and Renewable Energy has announced that supply chain disruptions due to the spread of coronavirus will fall under a force majeure clause; however, the enforceability and application of this clause is yet to be seen.

As India is the largest wind turbine production base after China in the Asia-Pacific region, and is also a significant producer of gearboxes globally, the suspension of OEM (original equipment manufacturer) activity during the lockdown will have adverse impacts beyond the Indian market

Economic relief package

The Indian government’s package for the power sector includes a three-month moratorium on payments by DISCOMs and waives penalty fees for late payments. The government also issued guidelines to grant renewables ‘must-run’ status and instructed renewable power producers to issue electronic invoices to DISCOMs (distribution companies) during the lockdown. This came after a number of state DISCOMs invoked ‘force majeure’ to suspend the procurement of renewables and defer payments, increasing the risk of non-payment of dues and the potential for stressed assets.