Indian solar projects of 3 GW risk penalties due to coronavirus

Source: IBC Solar AG (www.ibc-solar.com)

February 17 (Renewables Now) - The coronavirus that spreads in China could lead to penalties over delays for about 3 GW of solar projects in India worth a total of INR 160 billion (USD 2.24bn/EUR 2.07bn), according to an analysis by CRISIL.

The virus outbreak and its impact on the Chinese industry puts at risk Indian solar projects auctioned between July and August 2018 that have to meet scheduled commercial operation dates (SCOD) by July 2020. That is because India sources roughly 80% of its solar modules from China.

“Given that orders for modules are typically placed with a lead time of six months from SCOD, these projects are now in the process of either placing orders or receiving delivery of modules. Hence, any delay at this stage can prove costly,” said Manish Gupta, senior director at CRISIL Ratings.

The analytics company notes that some project developers can still decide to order modules from other locations, but that would mean using costlier equipment and receiving lower returns. As per the “Force Majeure” clause in the signed power purchase agreements (PPA), it is yet to be tested and may face legal and regulatory hurdles, CRISIL added.

The table below shows the typical schedule of penalties on account of delay in project implementation, based on a project with a capacity of 100 MW.

Delay in commissioning from SCOD Potential Penalty/ Action
0-30 days INR 200m penalty (pro-rata on per day basis)
31-90 days INR 800m penalty (pro-rata on per day basis)
More than 90 days Downward revision in tariff

(INR 10 = USD 0.140/EUR 0.129)

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