October 17

India likely to add up to 8.5 Gw renewable energy capacity in current fiscal- ICRA

New Delhi: India is likely to add between 8 Gigawatt (Gw) and 8.5 Gw of renewable energy generation capacity in the current financial year ending March 2019 followed by healthy growth next fiscal (2019-20) too, according to research and rating agency ICRA. 

The country added around 12 Gw renewable energy capacity in the last financial year ending March 2018. Contribution from solar was upto 9 Gw, wind upto 2 Gw and capacity addition from other sources was upto 1 Gw. 

"The project awards so far provide a reasonably healthy visibility for RE capacity addition in FY2019 and FY2020 with the expected addition of about 8-8.5 Gw in FY2019. This apart, RE projects are likely to remain cost competitive against conventional power sources," said Sabyasachi Majumdar, Group Head-Corporate ratings, ICRA Ltd. 

He explained imposition of safeguard duty on imported PV modules and the recent Rupee depreciation against the Dollar is estimated to increase the capital cost of solar power projects by 20-25 per cent. Although the impact of this is partly moderated by the decline in the PV module prices by about 20 per cent since June 2018. 

Further, the rising interest rates are putting pressure on the bid tariffs and on the viability of the wind and solar projects having tariffs less than Rs 3 per unit. Also, the winning developers in the recent bids are facing challenges in securing connectivity and open access to the inter-state transmission network, ICRA said in a statement. This has resulted in cancellation or capacity downsizing of some of the bids by Solar Energy Corporation of India (SECI). 

“Despite these challenges, the wind and solar power projects remain highly cost competitive against the conventional sources and would continue to increase their share in the generation mix over the next few years. The share of RE in the generation mix is expected to increase to 12-13 per cent by FY2022 from 7.7 per cent in FY2018,” Majumdar added. 

The bidding activity in the renewable energy sector has remained sizeable with central nodal agencies like the SECI and NTPC as well as state distribution utilities issuing bids for wind and solar power capacities of about 10 GW and 15 GW, respectively, during calendar year 2017 and 2018. While this augers well for the sector, several key concerns remain, the ICRA statement said.

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