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Indian solar projects worth US$2.24 billion risk incurring time and cost overruns, including penalties for missing commercial operation timelines, if the coronavirus outbreak continues to impact Chinese solar panel exports, CRISIL Ratings, an S&P Global company, said on Monday.
India sources around 80 percent of the solar modules it uses from China, as per CRISIL’s analysis. The coronavirus outbreak, however, has disrupted Chinese production and exports of solar panels, solar modules, and other critical equipment for the solar industry.
Due to factory shutdowns and production disruptions, exports of solar panels and other components out of China are being delayed, disrupting the supply chain of the solar power industries and affecting solar projects in Asia.
India, for example, already experiences delays in solar projects as imports of solar panels and solar modules from China are being delayed because of the coronavirus outbreak, developers and industry executives told Indian outlet Economic Times last week.
Chinese solar equipment manufacturers have run factories at low utilization or have halted operations altogether due to the coronavirus outbreak.
“Indeed, even the modules already manufactured are facing delays in transit to project sites on account of precautionary restrictions on transit at ports,” CRISIL said in its analysis.
“This puts at risk around 3 GW of solar projects auctioned between July and August, 2018, which need to meet their SCODs [scheduled commercial operation dates] by July 2020,” Manish Gupta, Senior Director at CRISIL Ratings, said in a statement, noting that “any delay at this stage can prove costly.”
If solar project developers in India target to meet the commissioning timelines, they could source more expensive modules from producers other than China. But in this case, the more expensive equipment—which could be 15-20 percent more expensive than China’s—could reduce project returns by as much as 3 percentage points, CRISIL says.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.