COVID-19: IMPACT ON INDIAN RENEWABLES
With number of infections in India still rising rapidly, considerable uncertainty
remains over economic outlook. The energy sector has been hit by multiple
demand and supply shocks. Short-term impact on the renewable power sector
has been relatively mild following a series of ad hoc relief measures
announced by the government. But outlook over the next few years appears
gloomier due to weakening power demand growth, deteriorating financial
condition of DISCOMs and further constraints in debt financing.
We have accordingly revised our base case solar and wind power capacity
addition estimate over 2020-2024 to 35 and 12 GW, down from our previous
estimate of 43 GW and 15 GW respectively.
Unfortunately for the sector, already grappling with a series of vexatious
issues over the last few years, the pandemic comes at an inopportune time.
The sector has seen a significant loss in growth momentum over last two
There is need for a robust roadmap for future growth giving due regard
to long-term structural benefits of the sector – improved air quality, energy
access and job creation. The government should focus specifically on
reforming power distribution sector, easing land and transmission
constraints, and accelerating adoption of storage and distributed renewable
solutions. Solar industry’s overdependence on imports has also cast spotlight
on domestic manufacturing.
On a positive note, there is huge optimism about future prospects of
renewable power. The crisis has refocused attention of governments and
policy makers worldwide to fight climate change and localise energy supply.
Both these priorities play to renewable power’s advantage.
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