The slowdown in the commercial activity is negatively impacting companies across the wind value chain in India. The lack of production is expected to drive up manufacturing costs.
During the first quarter of 2020, the price of wind turbines in India is estimated to rise to US$904/kW from US$864/kW. This is expected to further peak in the second quarter to reach US$943/kW.
This trend is mainly expected because manufacturers are facing significant downtimes, says GlobalData, a leading data and analytics company.
Moreover, with the extension of lockdown in the country it is certain that if there is a recovery in the market, it will happen only towards the end of the second quarter of the year.
As exports significantly influence manufacturing trends, the recovery of foreign markets plays a crucial role in reducing the pressure on the country’s prices.
During Q3 and Q4, the prices are expected to decline. However, the Q4 price in 2020 will remain higher than the Q4 price in 2019. The prices for Q3 and Q4 2020 are estimated to be US$923/kW and US$902/kW, respectively.
The wind supply chain is more diversified than the solar PV supply chain as it is heavily concentrated in China. Major production hubs are the US, Germany and Denmark.
However, the virus has spread across these regions, majorly intensifying in Europe and India, resulting in stringent lockdown measures, which are likely to continue for some more time. The enforced measures have slowed down production, with factories shutting down, due to the ongoing pandemic.
Somik Das, Senior Power Analyst at GlobalData, comments: “To support the government’s efforts, companies such as Vestas, Siemens Gamesa and Inox Wind have halted activities across all their plants in India, which has been a viable alternative to China and Spain. Lack of production is expected to create disruptions in supply, with significant consequences on the global market.
These barriers emerging in the global market are likely to contribute to the rise in the prices of wind turbines in India. The prices are expected to increase by 10% in the second quarter of 2020, in comparison to Q2 prices estimated before the outbreak.
Das concludes: “Probable delays of wind auctions and tenders will certainly impact the recovery rates of turbine manufacturing plants in India. The ongoing pandemic is an evolving issue and a shortfall in manufacturing capacity will affect the country’s push for wind deployment. Until a balance between supply and demand is achieved, manufacturers in India are expected to face a tough phase with substantial downside risk.”