The impact of Covid-19 on India’s energy sector, including wind power, has been sobering. Nearly all of the country’s 10GW wind-sector manufacturing capacity was shut down after the national lockdown was imposed in March. Project execution also came to a grinding halt in the busiest season of the year. As a result, only about 12MW of new capacity was added in April/May.
As restrictions eased from June, the sector struggled with supply-chain delays and the lack of availability of skilled personnel and had to build up again slowly.
However, despite the challenges and setbacks, the sector fundamentals remain robust.
On the policy side, the government is still committed to its climate actions plans. Although the tender rollout has been delayed, with only about 3.2GW wind tenders offered this year, the government is expected to double down on new tenders in a bid to meet the 60GW target by 2022.
In a positive development for the sector, the government extended the waiver of inter-state transmission system (ISTS) charges for renewable-energy generators until 30 June 2023. This will help reduce contracting uncertainties and boost inter-state power sale contracts. The government’s renewed focus on self-reliance in manufacturing is also expected to help the OEMs set up new capacities to cut down on imported components.
The market outlook seems stable as key investors and the developers are sticking with their pre-Covid plans despite the anticipated delays in project timelines and associated financial implications. In fact, Indian manufacturer Inox Wind won a 250MW order in May and SGRE won a 473MW order in August. The demand from public-sector companies and private industries is also expected to add about 0.7-1.4GW in the next 3 years, as per GWEC’s estimate.
The OEMs and the supply chain eco-system also seem to have weathered the storm. Although SGRE, Suzlon and Inox Wind, the top three OEMs, posted losses in the first quarter of India’s financial year (April-Jun 2020) because of lower execution and manufacturing challenges, there are a lot of positives.
During the pandemic, Suzlon managed to secure shareholder’s approval for debt restructuring, while Inox built a key 220KV grid station that will help it to get immediate connectivity for its upcoming projects. Suzlon and Inox both also have healthy order books of 876MW and 1,374MW, respectively, and have commenced manufacturing operations and project execution.
Both Inox and SGRE are going ahead with their plans for launching new 3.XMW turbines. Inox has already received 500MW advance orders for delivery in early 2021. Another positive for these OEMs, particularly SGRE, is the resumption of exports, which is expected to further ease the financial crunch in the current quarter.