The second Covid-19 surge is wreaking havoc in India, with cases surpassing six figures daily. Although India has not declared a nationwide lockdown, several states where the cases have peaked substantially are resorting to preventive measures, including lockdowns.
Reports suggest that some migrant workers across the country may be making their way home to avoid the logistical nightmare a lockdown may bring. However, it is not as widespread compared to last year’s exodus and limited to specific parts of the country.
As the health crisis threatens to get out of control, we took an in-depth look at what is transpiring on the ground to understand the situation at various project sites across the country.
A source at a large developer told Mercom that a major part of their standing labor force had returned home due to the chaos created by the second wave. After the initial rush to return, the workforce has now settled in the project areas. They have been provided with medical and quarantining facilities and strictly following COVID protocols.
The impact of the situation is not uniform among all developers, unlike the lockdown last year. Developers who are dependent on third-party engineering, procurement, and construction (EPC) services are more affected than those with an in-house EPC team.
A source from SJVN told Mercom that they are in the same boat as the rest of the developers. He said, “The tenders are floated by Indian Renewable Energy Development Agency, Solar Energy Corporation of India (SECI), Gujarat Urja Vikas Nigam (GUVNL), and we participated in it. So, the extension of the deadline depends on these entities. They should ideally extend the deadline for a month or two.”
He added that now, they do not have any project under construction. “We have a recently concluded 70 MW project with GUVNL, for which we will sign the power purchase agreement soon. The project will take off shortly. We also bagged a 75 MW project from Uttar Pradesh New & Renewable Energy Development Agency and are waiting for the Letter of Award.”
Arshi Chadha, Chief Operating Officer at Sunson Energy, a residential rooftop solar developer, told Mercom that the business had been adversely affected, and the second wave seems to have brought in more concerns.
She said, “To tackle the crisis, we have asked our staff to stay home, while our workers have gone back to their villages. We have done everything from our end to secure ourselves and our employees. The cause of the delay in delivering projects is genuine, and our clients understand the crisis. Everybody is falling sick. Whether it’s my vendor or my client, everyone is reporting symptoms. Even our payments are stuck, but then again, we aren’t spending money either, so things are fine for now.”
Similarly, an executive at Eden Renewables told Mercom that they had not requested an extension right now, and their projects will be commissioned very soon.
He said, “Our project will be commissioned once the Powergrid Corporation of India sub-station is ready. This is the first project at the Fatehgarh-II sub-station, which is under construction. Our project is at an advanced stage at this point. If they commission the sub-station in 30 working days, we can commission the project in another 15 working days. Our case is a bit different from other developers. We have around 20-30% workforce on site, but the migrant laborers are worried about the second wave. They want to return home while we have made all arrangements for their stay, food, and other essentials.”
A source in Rajasthan-based EPC company Solar 91 also mirrored the same sentiments and said, “It is bad as a lockdown has been implemented affecting small-scale projects. It is difficult to move things around, and our projects are across India, including Odisha and Maharashtra.”
According to the source, Solar 91 has both public and private projects, “We feel both parties should understand the situation and give sufficient time. As an EPC player, we also want to complete the project and move on. Small projects are affected compared to the larger ones.”
Avinash Hiranandani, Chief Executive Officer and Managing Director of Renewsys India, told Mercom that RenewSys is also affected as they are the ethylene, vinyl, and acetate backsheet suppliers to almost everyone.
He said, “We are also facing some logistical issues as the drivers who make deliveries are afraid of sudden lockdowns at the shipment’s destination. However, these issues get resolved in a day or two, and currently, we are managing our dispatches.”
He further added, “At our offices and factories, the moment someone tests positive, they and all the people who they were in contact with are sent for home quarantine — for a single positive case around 10-12 are sent for home isolation — which affects the production, but not so severely. There are constraints in banking too, as they are operating with limited staff. As a result, there are delays in payments and opening of letters of credit, among others.”
According to a source in the Rajasthan Renewable Energy Corporation (RRECL), installation activities are affected, especially rooftop solar installations, “However, utility-scale projects may not face the same pressure.” An extension is awaited and it is expected that 30-40% of the NTPC and SECI projects’ commissioning could move to next year.
A source at NTPC said that the company is not facing any labor issues, and their projects are nearing completion.
“It depends on what stage the project is. Our sites are located in Rajasthan. Since our projects are in township areas, we have taken sufficient precautions. We have not heard any reports coming from the project site highlighting a labor crisis. At this moment, it will be hard to say whether we should seek an extension in project deadlines,” the source said.
According to a source from another leading Indian solar developer Fortum, the issues are not so severe. “Although our labor strength has reduced, things are manageable. Our project is close to commissioning, so it did not impact productivity. However, we do anticipate a delay of a few days due to the current situation. We have provided all the necessary facilities that we usually do, such as labor colonies. But the pandemic has shaken them,” said the source.
He further added, “Our workforce is diminishing due to the health emergency. We have been requesting the MNRE to extend the project deadlines, but we can’t say what the ideal time frame of the extension should be as we don’t know when the pandemic would come under control. The MNRE may extend it for a couple of months and further for another five months, as they did last year.”
An executive at another large developer told Mercom that the second wave has wreaked havoc in the cities but not so much in the interior regions of the country. He said, “Our labor force is made up of locals. There may be some issues on the funding side since banks are now thinly staffed, leading to operational delays.”
According to the executive, COVID will affect large-scale projects on two fronts. Firstly, if anyone on site tests positive then everyone needs to quarantine which will delay the activity. Secondly, due to state curfews and lockdowns government approvals and inspections get delayed.
A source working with a turnkey solar energy solutions provider, Hild Energy, told Mercom that laborers from Rajasthan and Gujarat are better skilled, “Around 80% of the labor force are locals. However, there are certain restrictions like no work on site after 6 pm in Rajasthan. In large-scale projects, if the labor force is on-site, then a doctor is assigned. Things are moving smoothly, and our laborers are not moving out of the site. We do need skilled labor for transformer connection and inverter connectivity; otherwise, we can manage with the regular labor force.”
Similar sentiments were shared by an official at the Gujarat Urja Vikas Nigam (GUVNL), who said, “Gujarat has night curfew, but based on the current scenario, we expect a repeat of what happened last year. However, we haven’t heard any issues regarding the shortage of workforce from the companies. We haven’t made any plans to provide an extension yet. It all depends upon the situation; if the lockdown continues and companies come to us with genuine reasons, we may provide the extension.”
Solar Associations Ask for Extension
The National Solar Energy Federation of India (NSEFI) has already written to the Ministry of New and Renewable Energy (MNRE), seeking a blanket extension of four months for commissioning projects in addition to the five months provided earlier.
The letter states that due to the rise in Covid-19 cases, solar power projects continue to face implementation issues as the government machinery is preoccupied with the pandemic control measures and lockdowns. The understaffed government offices have slowed down the processes.
The solar industry is coping with delayed shipments and approvals by the Bureau of Indian Standards, leading to financial hardships for developers.
Praveen Golash, Joint Secretary, Solar Power Developers Association (SPDA), told Mercom, “We are facing multiple issues at this point. Our labor force has reduced as workers are returning home in droves. Even our finances are getting stuck, and we are not able to pay the vendors. Banks disburse the amount based on the work completed on site. The banks send their teams to verify the on-ground status of the project. However, with the surge in Covid-19 cases, the inspecting teams refuse to visit the sites. As a result, the disbursement of funds gets stuck. Our cash flow is severely affected,” he said.
According to Gholash, developers face an uphill task, especially those who have scheduled commercial operation dates in a couple of months.
“Thus, we asked for a three-month extension over the five months that was provided last year. We have also specifically demanded that no documentation clause should be added to the extension. These documentations try to verify the cause behind the delay in commissioning. Developers are supposed to produce documents from vendors and contractors, which is cumbersome and time-consuming. These documents are sent to SECI, MNRE, state distribution companies, etc., and considering the number of developers and the load, it will take forever to complete the project,” he said.
The Renewable Energy Association of Rajasthan (REAR) also wrote to the MNRE, claiming that the developers and engineering, procurement, and construction service providers are facing scarcity of components apart from labor and funds shortage. REAR has requested MNRE to extend project completion by three months.
The large-scale projects in the final stages are able to continue, but the projects that are still in the construction phase (Q3 & Q4 2021) are expected to face delays.
According to REAR, Rajasthan has posed Covid-19 restrictions until May 3, 2021, and the empaneled vendors under the rooftop subsidy program have no option but to wait for the situation to normalize. Besides, under the MNRE Phase-II program, there is a specific requirement to use domestic content requirement modules that have become quite expensive thanks to the scarcity of materials and supply-chain disruptions.
After speaking with over a dozen companies, the takeaway from the ground is that the second wave of COVID depends on whether it is a rooftop or a large-scale project. More importantly, the projects that are in the pre-construction and early stages of construction will be the most affected. Projects which are in the final stages of completion should fare better. Rooftop projects like last year are again more seriously affected due to COVID protocols in the population centers. Unlike last time, there is no national lockdown, which means the timeline extensions could be on a case-by-case basis.
“Unless warranted in specific instances, project timeline extensions may not be easily approved this time around. Last year’s 2-month lockdown and the ensuing 5-month extension resulted in almost a 60% drop in solar installations. Another similar scenario this year could mean dire consequences for the industry financially. That said, health and safety should be the primary focus until the 2nd wave of covid is brought under control,” said Raj Prabhu, CEO at Mercom Capital Group.
Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.