Impact of COVID-19 on Operational Projects and Rooftop Solar: Report

COVID-19 has had a limited impact on the operational wind and solar power projects while rooftop solar projects have been the most adversely affected

COVID-19 has had a limited impact on the operational wind and solar power projects as it depends on natural resources, i.e. wind and sunlight which has not been disrupted while at the other end of the spectrum rooftop solar projects are the most adversely affected in the renewable sector as most of them are small-sized companies, a new report by CARE Ratings has revealed.

For operational projects the spread of coronavirus has however impacted the availability of workforce; limited O&M staff is allowed to work on specific permissions. Also, some developers are facing issues with respect to raising timely monthly invoices for the sale of power. Nonetheless, the major issue with operational projects is that due to lower power demand and discoms are attempting to resort to RE curtailment.

Additionally, to reduce pressure on various state discoms, Central Electricity of Regulatory Commission (CERC) reduced the rate for late payment surcharge payable by discoms to power generators from existing 18 percent p.a. to 12 percent if the due date falls between March 24, 2020, and June 30, 2020. Also, the said late payment surcharges shall be applicable if there is any delay in the payments beyond 45 days from the date of the presentation of bills. Given the current scenario, discoms may start delaying payments to RE projects as most of the high paying customer facilities (manufacturing units, malls, railways, metro rail, corporate offices, etc.) have been completely shut down impacting the cash flow position of all the state discoms. Also, timely collection of bills has also become a critical issue for discoms as physical remittance of payment has been impacted given the current lock-down situation.

For rooftop projects, the report states that smaller rooftop companies may lack the financial firepower to absorb any loss or meet extra working capital requirements. The movement is restricted and people will not allow anyone to enter their houses or enter factories that are closed. Rooftop solar will be impacted more than grid-connected, which is under essential services. Post lockdown, the industry will have to deal with the aftermath as new rooftop solar is not a necessity for consumers. With users dealing with several financial problems, rooftop solar will be the least priority on their list leading to a delay in the decisions regarding the installation of rooftop solar.

In another article, we had covered how the report had detailed that under implementation solar projects have suffered the biggest impact of the COVID-19 pandemic as solar cells and modules are largely imported from China wherein there was lockdown since December 2019. Also, the outbreak had coincided with the actual solar project execution schedule as maximum execution happens in the last quarter of the fiscal year in India.