- The overall combined PV capacity additions in 2020 and 2021 were 19 per cent below their previous forecast
- Despite government efforts to strengthen the performance of Discoms, the pending payments due to all electricity generators increased by 48 per cent
India will install 23 per cent less solar capacity in 2020 as compared to the capacity addition in 2019, with the biggest drop in distributed PV installations as per a report by the International Energy Agency (IEA). The report titled, “Renewable energy market update” added that a rebound was expected in 2021 with capacity additions exceeding 2019 levels.
The report stated that challenges concerning the financial health of state-owned companies responsible for the distribution and sale of electricity (DISCOMs) continue and hamper the faster growth of renewables. It added that the Covid-19 crisis has put additional pressure on DISCOMs and solar PV and wind development. A rebound is expected in 2021, with capacity additions exceeding 2019 levels said the report.
As per the report, despite government efforts to strengthen the performance of Discoms, the pending payments due to all electricity generators increased by 48 per cent. It almost doubled in the case of renewables generators. This trend continued in the first quarter of 2020.
Weak financial health of Discoms
The report said that the weak financial health of Discoms has already resulted in slowing development of distributed PV. It has also caused delays in the signing of new power purchase agreements with solar developers and contract renegotiations. It stated that during the lockdown, India’s electricity demand declined by 25 per cent, mostly in industrial and commercial segments. They account for the majority of discoms’ revenues in most states.
IEA said that it expects a six per cent year-on-year decline in demand in 2020. This will worsen discoms with already challenging finances. This situation had been compounded by supply chain disruptions and the strict lockdown measures that made many workers to return to their hometowns.
Macroeconomic challenges
The report said that it expects a slowdown in the construction of utility-scale projects. It added that macroeconomic challenges may lessen the willingness of electricity consumers to invest in distributed PV. IEA also said that the overall combined PV capacity additions in 2020 and 2021 were 19 per cent below their previous forecast.
