Where Does India’s Rooftop Solar Market Stand Since COVID-19 Lockdown_

India’s rooftop solar industry has started recovering steadily from the adverse effects of the COVID-19 pandemic, with the country returning to normalcy following the easing of lockdown restrictions in phases.

After the lockdown was imposed in March, activity in the solar industry ground to a halt. Solar installations fell 81% from 1.1 GW installed in the first quarter to just 205 MW in the second. The rooftop solar market, which was already struggling, crashed in Q2 due to disruptions from COVID, and installations in Q2 were the lowest since the second quarter of 2016.

However, the worst may be over for the rooftop market as the economic activity has resumed and installations have picked up in the second half of the year. According to Mercom India’s Q3 2020 India Solar Market Update, the rooftop solar installations stood at 155 MW in Q3 of 2020, an increase of 82% compared to 85 MW installed in the second quarter Q2 of the year.

Mercom spoke to several rooftop solar installers to understand where things stand since the lockdown was imposed.


Workforce

The project construction almost stopped during the early phase of the lockdown. There was no manufacturing activity with all units shut, and most workers went back to their homes. However, the issue seems to be almost resolved as most workers have now come back to work in the past few months.

“There was a glitch initially in business operations during the start of the lockdown owing to the challenge of mobilizing personals on the ground. However, the situation has improved in the last couple of months and is steadily getting back to normalcy,” said Sanjeev Aggarwal, Managing Director & Chief Executive Officer of Amplus Solar.

Nikhil Nahar, Co-founder and Director of SolarSquare Energy, said, “Post-lockdown months have seen a severe crunch in workforce availability. While the jittery counts of the workforce even prevail today as COVID-19 has brought in the factor of uncertainty.”

Business levels 

Despite the increase in rooftop additions in Q3 2020, the installations in the first nine months (9M) of 2020 stood at 434 MW, a 46% decline compared to the 800 MW installed in 9M 2019, Mercom’s recently released report stated.

“Restrictions on the workforce’s movement and equipment imposed during the lockdown have impacted the business volume during the pandemic. The worst-hit has been reported in the second quarter, where the deficit in rooftop solar installations across India is down drastically on a year-over-year basis,” said Nahar.

“Our business has not been as impacted as anticipated during the start of the lockdown when several of our rooftop projects were shut down or operating at minimal capacity. Despite uncertain times, we continue to acquire new projects from commercial and industrial consumers. Several existing consumers also opted for capacity expansion of their solar facilities,” said Aggrawal.

Liquidity

Nahar explained that the delays in solar project execution are clear indicators of the constraints on liquidity faced by the industry at large. He added that the industrial houses, which already decided to go solar, also shifted their priorities to use the limited liquidity to clear their core projects, pay rent for facilities, and clear employees’ salaries.

In August 2020, the Reserve Bank of India (RBI) introduced several policy measures to enhance liquidity support in the economy and ease the financial stress caused by the COVID-19 pandemic. The bank also increased the limit for lending to renewable energy, including solar power and compressed biogas projects.

“As the pandemic surged, investors in the market tried and lowered their risks by reducing the cash in the market, resulting in strain on the liquidity. However, RBI’s monetary measures, such as repo rate reduction and other policies, eased out this stress,” said Aggrawal.

Tide is turning 

The rooftop solar industry has a positive outlook as the year comes to a close despite its slow recovery.

Nahar said industries have started recovering from the pandemic shocks, and business leaders are approving their rooftop solar plans to save on their electricity expenditure, which is a significant chunk of their operational cost.

The C&I segment dominated the Indian solar rooftop market in Q3 2020 and accounted for a market share of 95% of installed capacity, according to the Mercom report.

He added, “The rooftop solar industry currently lags behind the targets, but it is likely to bridge the deficit significantly in the coming quarter.”

“After the lockdown, it took a while for all the businesses, including solar, to get back on their feet. The recovery of the solar industry in India has been slow, and other policy challenges, such as the continued impact of extended safeguard duty, may also prove to be roadblocks in improving the industry’s recovery rate,” said Aggrawal. 

Positive Impact of the COVID-19 

The pandemic has made commercial and industrial customers realize that going solar is one of the best ways to cut down operational costs. Rooftop is also one of the cheapest sources of power for C&I customers considering the high retail tariffs they pay.

“The booming sectors like agro, pharma, hospitals, and education have emerged as the industries that are keen to go solar,” said Nahar.

“While working from home is set as a new normal by many offices, people have started realizing the power of residential rooftop solar that can help them balance the surge in their residential electricity consumption,” Nahar added.

 Aggarwal added that the COVID-19 health crisis increased the awareness about renewable energy with many countries announcing their commitment towards clean energy and sustainability. India has also been following suit as more consumers now demand clean energy.

Mercom anticipates a robust recovery for rooftop next year, especially in the second half of the year. The recent Mercom forecast points to approximately 40% growth in rooftop installations year-over-year in 2022.

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