Rating agency ICRA in its latest report has said that India’s solar capacity addition is likely to come down further by 15 percent to about 5.5 gigawatts (GW) in the current financial year (FY21), given the continued execution challenges post lockdown restrictions since March 2020, which have resulted in disruption of supply chain along with labour availability issues. It noted that the solar capacity addition was also 15 percent lower at 6.5 GW in FY20 than its previous estimate of around 7-7.5 GW.
According to the report, the domestic solar capacity addition in FY20 has remained lower, mainly on account of the disruption in supply chain and execution disruption in Q4 FY20 due to the COVID-19 pandemic. It also stated that the restrictions and the lack of availability of labourers have added to the woes of the sector that continues to remain plagued by various execution-related issues such as delays in land acquisition, receipt of evacuation approvals, regulatory delays in tariff adoption, and obtaining financial closure in a tight-financing environment.
Further, the report said the announced tender pipeline by Solar Energy Corporation of India (SECI) has been significant. It said strong policy focus and an improved tariff competitiveness keep the solar sector prospects intact in the long run. However, it noted that in the current scenario, with the dip in demand after the lockdown due to the COVID-19 pandemic, revenues and cash flows of the state-owned distribution utilities have been affected leading to increase in the counter-party credit risk for the sector.
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