Solar Power Projects Under Construction Facing Higher Risks: Report

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  • Uncertainities have been caused by factors like COVID-19 related lockdowns, change in duties for solar panels and consequent difficulties in importing panels among others
  • Solar power generation in the first quarter of the current financial year (2020-21) was lower by 3-4 per cent than that of the same period last year

As per a report by the Economic Times, solar power projects which are currently under construction in India are facing a higher risk now due to multiple uncertainties and their financial closure is likely to be delayed, research and ratings agency India Ratings said. The report added that the uncertainities have been caused by factors like COVID-19 related lockdowns, change in duties for solar panels and consequent difficulties in importing panels, constraints in mobilising labor for implementation, delays in signing of power purchase agreements after bidding, delays in tariff adoption and changes in module prices.

The report added that as a result of these, the economics of projects could be under significant stress compared to the scenario that developers envisaged at the time of bidding. The agency said that risks for under construction projects have increased because of these uncertainties and could delay financial closure. It added that the number of acquisitions in renewable energy projects has kept the investor interest in the sector high. This has encouraged developers to bid for projects.

Sporadic instances of grid issues

As per the report, solar power generation in the first quarter of the current financial year (2020-21) was lower by 3-4 per cent than that of the same period last year. The report also said that seasonal variations to some extent depending on the monsoon duration in a year are not unusual for solar projects.

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The ET report also said that the report said that sporadic instances of grid issues because of overloading at the substations belonging to intra-state transmission systems and tracker under-performance have created significant deviation in electricity generation as compared to estimates in few projects.

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