Covid Impact on Solar -
The Global Renewable Energy Market Size was expected to expand from its worth of USD 184.3 Billion in 2020 to USD 226.1 Billion by the end of 2021. However, the Covid-19 pandemic has caused the industry to contemplate new investment and business strategies. The Solar industry is expected to dominate the global renewable energy market during the forecast period. The major solar energy producers like Canadian Solar (Canada), Jinko Solar (China), SunPower (US), and Tina Solar (China) are operating with limited production capacities.
One of the largest drawbacks of the COVID-19 pandemic is the delivery of equipment and raw material to power plants. China, being the biggest global producer of clean energy technologies, like solar panels and batteries has been hit the hardest by the pandemic and has not been able to keep up with demands.
Delayed deliveries have left renewable energy companies helpless in complying with deadlines for equipment installation. The huge drop in deliveries has affected some major projects like India’s 3000MW solar and wind energy project which now faces delays. A massive reduction in delivery volumes of rechargeable batteries in the European Market has also been seen. BYD, the global batteries giant, has been unable to test a new series of battery models.
The delays, based on a Wood Mackenzie research insight, could cost project development delays of up to 2 gigawatts in 2020 and could even reach 5 gigawatts by late 2020 or 2021 if the scenarios worsen.
The COVID-19 pandemic is also compelling developers across the board to contemplate their financial approach. The Solar Energy Industries Association states that almost USD 20 billion set aside in tax equity funding for this year is threatened by the pandemic. Adding to this, companies are also finding that their commercial paper, or unsecured short term debt instruments, used to fund day-to-day operations are also evaporating quickly.
Companies floundering to ensure sufficient liquidity are hence forced to tap revolving credit facilities. Large developers have enough on their balance sheets to finance projects, but that is not the option for smaller developer. Needless to say, if development capital decreases significantly, expect to see larger players eyeing development rights controlled by smaller companies.