India’s Lockdown Amid COVID-19 Hurts Wind Supply Chain Globally: Report
India is the largest wind turbine production base after China in the Asia Pacific region
The Global Wind Energy Council (GWEC) has released a new report which analyzes how COVID-19 is impacting the global wind industry, including India.
According to GWEC’s report, “When the COVID-19 crisis was first reported in China, disrupting China’s wind supply chain, large western turbine producers began shifting their supply chain by using their Indian facilities as a solution to mitigate the expected damages caused by COVID-19 at their production facilities in China. This strategy is not new and was first adopted by European gearbox suppliers ZF and Winergy in 2018 to limit the damage imposed by the U.S.-China trade war. However, the lockdown in India has now made this solution unworkable, and western turbine original equipment manufacturers (OEMs) are now also facing the supply chain disruption challenge in Europe.”
India is one of the world’s largest wind gearbox manufacturing bases with nearly 10 GW of annual output.
The report also states that at present, ZF wind and Winergy have halted their production in India, and NGC has also suspended the construction work at their upcoming new facility in Sri City. There are gearbox manufacturers for wind turbines.
“As India is a key wind gearboxes exporter to the U.S. onshore wind market, the disruption of COVID-19 on Indian wind gearbox supply chain is not only expected to have a negative impact on its home market but also the current onshore wind installation rush in the U.S.,” the report added. According to GWEC’s pre-COVID market outlook, compared to 2021 and 2022, 2020, is expected to be a slow year for India. Issues like the non-availability of grid and land have already been reported as the challenges impacting the new installations in 2020.
To comply with the 21-day lockdown in India, both local and international turbine OEMs and components manufacturers temporarily suspended their production activities in India. However, O&M services continue to operate with a reduced workforce.
India is the largest wind turbine production base after China in the Asia Pacific region, with annual wind turbine manufacturing capacity up to 10 GW.
As per the GWEC, India is the world’s fourth-largest wind market in terms of cumulative installations.
In February 2020, Mercom reported that the Ministry of Finance issued a clarification that coronavirus will be covered in the force majeure clause (FMC) and should be considered as a case of natural calamity.
In response to this statement, all renewable energy projects that are currently under construction in India will receive an extension of their commissioning deadlines. Following the three-week nationwide lockdown imposed on March 24, 2020, all non-essential businesses in the country have been shut down for three weeks. To ensure uninterrupted power generation, including generation from renewable power projects, however, limited operation and maintenance (O&M) staff are allowed to work on specific permission from the state authorities.
Earlier, it was reported that the Ministry of Home Affairs issued the order stating that all offices of the government of India, its autonomous and subordinate offices, and pubic corporations will remain closed except certain essential services, including power generation and transmission units. To maintain uninterrupted power supply across states, power generation (including renewable power generation) is designated as an essential service.
According to the MNRE notice, the renewable energy power generation includes projects either interstate or intrastate, supplying power to DISCOMs through agencies like the Solar Corporation of India Limited (SECI) and the National Thermal Power Corporation (NTPC). This includes solar projects, wind projects, solar-wind hybrid projects, hydro projects, and biomass projects.
The Indian government has approved an economic relief package for the power sector; however, this does not include power generation but instead focuses on distribution companies (DISCOMs). The package includes a three-month moratorium on state-owned electricity DISCOMs and waiving penalties for late payments.
Recently, the MNRE announced several changes in the existing policies. Some of these are, the Ministry’s clarification regarding the payment to renewable energy generating stations during the moratorium provided to distribution companies (DISCOMs) by the Ministry of Power (MoP).
The MNRE has also announced the extension that all renewable energy projects currently under implementation will be given an extension of time in light of the nationwide lockdown to the Coronavirus pandemic.
On April 6, 2020, the government also issued guidelines for renewable power generators for issuing invoices to DISCOMs as physical invoices may not be possible under lockdown measures.
“This package is part of the Indian government’s priority to ensure round-the-clock electricity supply to power the country during its 21-day lockdown,” states the GWEC’s report.
Regarding China, the GWEC states that even after the lockdown measures were lifted on March 28, 2020, travel ban on all foreign nationals, including those holding a work visa or residence permit, came into force in the country.
On March 30, the China Wind Energy Association (CWEA) launched an initiative calling on the National Energy Agency (NEA) and National Development and Reform Commission (NDRC) to postpone the deadline for projects connected to the grid by at least six months. China is the world’s largest wind market in both new and cumulative installations.
“This extension will be crucial for China’s wind industry to realize the installation rush that was foreseen for 2020. More than 60 GW of onshore wind projects were approved before the end of 2018 and, therefore, must be grid-connected by the end of 2020 to receive the feed-in-tariff, as China will move into a ‘subsidy-free’ policy starting in 2021,” states the report.
The GWEC observed that the pressure is tremendous for project developers and manufacturers considering the financial consequences caused by the disruption of COVID-19 on the Chinese wind supply chain.
Image credit: tsushima / CC BY
Anjana is a news editor at Mercom India. Before joining Mercom, she held roles of senior editor, district correspondent, and sub-editor for The Times of India, Biospectrum and The Sunday Guardian. Before that, she worked at the Deccan Herald and the Asianlite as chief sub-editor and news editor. She has also contributed to The Quint, Hindustan Times, The New Indian Express, Reader’s Digest (UK edition), IndiaSe (Singapore-based magazine) and Asiaville. Anjana holds a Master’s degree in Geography from North Bengal University, and a diploma in mass communication and journalism from Guru Ghasidas University, Bhopal.