How to revive India’s solar sector post Covid (Indian renewable energy sector needs urgent help)

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 How to revive India’s solar sector post Covid (Indian renewable energy sector needs urgent help)

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• March 2020 status check: The MNRE (Ministry of New and Renewable Energy) had announced that 31 GW solar capacity projets were being tendered, and another 21 GW was under deployment. These involved more than 70,000 jobs. The total target of 100 GW solar energy was tough, but MNRE was trying. 
• COVID-19 hits hard: The viral lockdown has put paid to these plans in the short-term.

1. Strategic revival plan is urgently needed
2. Module and cell importers had started feeling the impact of China's lockdown from Jan 2020
3. Imports in Jan were down 70% (compared to 2019)
4. 80% of solar modules are directly imported from China
5. Total 3 GW domestic mfg capacity is too less

• Invoking Force Majeure: The MNRE has invoked this clause, covering various aspects that Renewable Energy (RE) plants will keep generating, and payments from Discoms will (must) happen. But these measures need expansion.
• Power demand: Today, the RE power demand is largely driven by subsidised residential sector, so power generators know that payments will be delayed. Also, excess supply will be cut, by the Discoms (electricity distribution companies). For generators, the cash inflow is hurt, but outflows (debt repayments and fixed costs) are continuing. Using the RBI moratorium means making a lumpsum payment at the end of 3 months.
• A proper relief plan:

1. FIRST - Suppliers and developers need contractual relief. The MNRE must process timely resolution of claims, with clear-cut guidelines. Some matters are not under the MNRE – generation cuts, Discom payments, logistical delays, debt repayment, market liquidity. Handle these too.
2. SECOND - Since receivables are under a cloud, RE generators' ability to service debt will remain stressed even after a few months have passed. The RBI must give clear guidelines on flexibility in handling such accounts. Given the uncertainties, fresh debt may not be available. Monetary policy alone won't help. We need government bonds and dedicated debt funds (for RE sector). 
3. THIRD - Workforce welfare must be taken care of by the government. If we take care of construction and O&M workers (70% of total) during lockdown, they'll come back soon later 

• Black swan event: COVID-19 is a black swan event that is impacting the energy transition of the world. India will lose at least 2 quarters, and MNRE must scale up its response now. [Nassim Taleb, the author who coined the term "Black Swan", does not consider the 2020 pandemic a Black Swan event but a White Swan (predictable) event]
• Summary : The energy transition plan of India - from fossil fuels to renewables - is hit badly due to the lockdowns and relief is required.

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