How COVID-19 is impacting India’s solar industry: A Timeline [2020]

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Written by Riya Sirdeshmukh

Aug 26, 2020 • 6 min read

(last updated on September 29, 2020)


Pre-coronavirus (2019)

This is what India’s Solar Industry looked like towards the end of 2019:

pre coronavirus solar india

Overall, the renewable energy sector in India was a fast-growing sector with lots of promise, potential, and with the increased support of Government and improved economics, the sector had become attractive from an investor’s perspective.

Now that we have painted a picture of India’s solar power industry in 2019, we can dive deeper into the events taking place in the year of the COVID-19 pandemic and the subsequent effects on the solar industry.

January 2020

> 3rd January 2020, China officially notifies WHO of a coronavirus outbreak

> 30th January 2020, India confirms its first coronavirus case

Imports of solar power equipment in January 2020 decline by about 70% as compared to January 2019 due to China’s lockdown.

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February 2020

> 11th February 2020, WHO names the disease COVID-19, short for “Coronavirus Disease 2019”

People pay bills to Power Distribution Companies (DISCOMs) who then have to pay dues to Power Generation Companies (Gencos). Over the years, DISCOMs have not been able to procure funds to purchase the power they supply from Power Generation Companies (Gencos) and have been accumulating a debt of more than Rs. 90, 000 crores as of February 2020.

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March 2020

> 11th March 2020, WHO declares COVID-19 as a pandemic

> 12th March 2020, India records first COVID-19 related death (a 76-year-old man from Karnataka)

> 24th March 2020, PM Modi announces 21-day nationwide lockdown

> 27th March 2020, Migrant workers across India start walking back home

The electricity demand in India dropped from 163.73 GW on 20 March to 127.96 GW on 25 March when the country started its lockdown, shown here:

electricity demand drop india

This is because most commercial and office spaces are forced to close and hence, no longer require electricity. People begin transitioning to the “new normal” and working from home.

The supply side also faces barriers due to the pandemic. 85% of labor in solar parks are migrants and hence, the migrant exodus as well as disruptions in global supply chains of solar equipment cause delays in projects. COVID-19 begins to affect every aspect of renewable energy from the supply chain down to the installers.

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April 2020

> 1st April 2020, the World Bank estimates that COVID-19 could push 11 million people into unemployment-related poverty

> 12th April 2020, renewable energy project developers and DISCOMs are granted an extension on commission and repayment deadlines, through the force majeure clause

> 14th April 2020, PM Modi extends India’s nationwide lockdown once again until 3rd May

> 15th April 2020, The International Monetary Fund warns that the world is facing its worst economic crisis

> April 30, 2020, the installed renewable energy capacity stands at 87.26 GW, of which, solar comprises 34.81 GW although almost no renewable energy capacity was added in April 2020.

India’s electricity demand falls by approximately 30% during the April-May period, owing to the lack of usage of industrial and commercial establishments.

The economic and health crises push millions of people into the unemployed sector, causing a lack of financial liquidity, i.e, consumers do not have the money to invest in solar panels and DISCOMs face even greater losses. As of April, DISCOMs debt had snowballed to Rs. 1.17 Lakh crores.

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May 2020

> 1 May 2020, India’s nationwide lockdown extended until May 17th

> 13th May 2020, WHO says this virus “may never go ever” and will become endemic. Hence, it is imperative to adjust to the “new normal”

> 17th May 2020, India’s nationwide lockdown extended again until May 31st

> 19th May 2020, India reports 100,000 confirmed cases

> 20th May 2020, Super Cyclone Amphan hits East India

> 21st May 2020, power returns to some villages in the Sunderbans which use solar energy while many other parts of the region lose power for weeks due to the cyclone

> 26th May 2020, Severe heatwave conditions impact North and Central India

Severe weather conditions such as the cyclones and heatwave remind the nation, not only that climate change is still looming but also, the importance of electricity for day-to-day functioning in these extreme conditions. Adding both together, the general sentiment could also be to acknowledge the power in renewable sources of energy given these two issues.

Looking at the consumer side of the situation, on one hand, under lockdown, local electricity companies had to estimate electricity bills for March, April, and May due to the ban on movement preventing on-site meter readings. The estimates were based on the winter months leading to lower electricity bills even with higher electricity usage. On the other hand, due to work from home mandates during the summer, when current site readings could be done, residential electricity bills were higher.

In terms of the effects on solar energy providers, according to the May 2020 CRISIL report, projects worth Rs 160 billion, totaling 3 GW of solar power capacity, could be hampered by delays in 2020.

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June 2020

> 3rd June 2020, Cyclone Nisarga hits West India

> 8th June 2020, India lifts lockdown restrictions (Unlock 1.0), despite fears of a surge; PM Modi launches Atma Nirbhar Bharat Campaign

> 12th June 2020, India overtakes the United Kingdom to become the fourth worst-hit nation in the world

> 29th June 2020, Global COVID-19 death toll surpasses 500,000

Again looking at the consumer side of the story for this month, as the lockdown eases, electricity companies start sending out meter readers to measure actual consumption. The deficit from the previous months was added to the June bill leading to exponentially high electricity bills across the nation.

Subsequently, with easing restrictions on movement, solar companies begin procuring and setting up solar plants once again; though at a much slower rate owing to the lack of labor, difficulty in movement of goods, and delays in site inspections and approvals.

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July 2020

> 2nd July 2020, India further lifts lockdown restrictions (Unlock 2.0), despite surpassing 600,000 coronavirus cases and 17,834 deaths

> 6th July 2020, India overtakes Russia to become the third-worst hit nation in the world

> 10th July 2020, PM Modi vows to end India’s dependence on imported solar equipment under his Atma Nirbhar Bharat Campaign while inaugurating Asia’s largest solar project in Rewa, Madhya Pradesh

> 14th July 2020, Moderna, the first potential coronavirus vaccine tested in humans, yields promising results.

> 17th July 2020, India’s COVID-19 count crosses 1 Million

The country’s solar energy industry needed a stimulus package, and the government has provided one by vowing to purchase only domestic solar products as well as imposing tariffs and non-tariff barriers on imported solar equipment. This could ensure that India stays on track with its clean energy goals if domestic solar manufacturers can efficiently bolster the supply side of the industry. But, if there is a deficit in domestic supply, having barriers to imports will make solar energy more expensive for the end consumer further curtailing their interest in solar.

Overall, the industry slowly seems to be breaking free of the pandemic-induced inertia.

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August 2020

> 6th August 2020, India’s COVID-19 count crosses 2 million 

> 13th August 2020, WHO reports that COVID-19 is costing the global economy over $375 Billion every month

> 30th August 2020, India becomes the first and only country to report 78,000 new cases in a single day making India’s COVID-19 outbreak the world’s fastest-growing

This month, prime minister Modi announced the mega initiative of “one sun, one world, one grid” which has an ambitious aim to create a trans-national electricity grid supplying solar power across the world.  The idea behind this is that the sun does not set and is always shining in some parts of the world. Hence, integrating the grids would lead to greater power efficiency, lower project costs, and higher asset utilization.

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September 2020

> 6th September 2020, with 4.1 million cases, India overtakes Brazil to become the second worst-hit nation in the world

> 16th September 2020, India’s COVID-19 count crosses 5 million 

In Q1 of this fiscal year, the Indian GDP shrank by -23.9%. The impact of this was felt by almost every Indian industry, including the solar industry. Amidst raw material and labor shortages brought on by the shrink in the GDP as well as government-sanctioned trade barriers on solar imports, Indian PV manufacturing leaders speak out about the need for a fiscal stimulus package, alternative supply chains as well as research into automation, i.e., an overhaul of the current functioning of the solar industry.


The Way Forward

way forward solar covid19

The choice of which path the renewable industry will take seems to be in our hands. We, consumers, producers, and other stakeholders, must act now in the following three areas in order to ensure that COVID-19 leads to greater climate reform:

way forward for solar covid 19 summary

JM Finn, a wealth management firm, predicts that the current crisis marks a farewell to the old economy of oil and banking stocks while signaling the rise of a new, tech-focused economy, which was already looming before the pandemic hit. Industries to look out for are digital banking, renewable energy, healthcare, and robotics provided we continue to question and change our existing ways of living. Therefore, it is how we react now to reach our climate goals that will determine how many more ‘the year 2020’s we will encounter. We must continue on our path towards a greener future!


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