FIle of image of solar panels
India is likely to add an estimated 16 GW of renewable energy over FY23, rating agency ICRA said on January 10, adding that the country has a strong pipeline of 55 GW clean energy projects, PTI reported.
In a statement ICRA noted that the outlook for capacity addition “remains strong” due to a large project pipeline and “highly competitive tariffs offered by these projects”. Compared to 12.5 GW expected in FY22 and 7.4 GW in FY21, it expects 16 GW capacity addition in FY23.
It feels commitments made at the recent COP26 summit such as increasing non-fossil fuel power capacity to 500 GW and meeting 50 percent energy requirement through renewables by 2030, strengthen prospects for the renewable energy sector.
It also noted that capacity addition made “strong recovery” between April-November 2021 (FY22) – adding 8.2 GW compared to 3.4 GW during the same period in the preceding year.
Girishkumar Kadam, Senior Vice President & Co-Group Head – Corporate ratings at ICRA also expects the backlog of projects, awarded by central nodal agencies and state distribution utilities, to push capacity addition.
“(There) remains large with under-development solar, wind and hybrid capacities of more than 55 GW. Basis this, ICRA expects the RE capacity addition to increase from 7.4 GW reported in FY2021 to 12.5 GW in FY2022 and further to 16 GW in FY2023,” Kadam said.
To support this Kadam pointed out that the Solar Energy Corporation of India (SECI) showed progress in signing power purchase agreements (PPAs) over the past six months, followed by wind and hybrid.
Near term challenges include execution headwinds and supply chain challenges for procuring modules and wind turbine generators.
ICRA also noted that the average price of imported solar PV modules (Mono PERC) has increased by over 35 percent over the past 12 months, putting upward pressure on capital costs for solar power projects. Besides this, there was also a hike in Goods and Services Tax (GST) rate for solar power equipment.
Vikram V, Vice President & Sector Head – Corporate Ratings at ICRA opined that the availability of adequate funding avenues at cost competitive rates remains critical to achieve these capacity targets.
Meanwhile, a Bridge to India report estimates India country will add 10 GW of renewable capacity within this year itself (2022). This is down 10 percent year-on-year (YoY), The Economic Times reported.
It added that capacity addition prospects would “depend greatly on the timeline for clarity on transmission lines in Rajasthan and Gujarat”, adding that many projects have already got relief due to module supply disruptions.
It expects rooftop and open access solar projects to take an “immediate hit” if the basic customs duty (BCD) is imposed as expected starting from April 2022. The final announcement on BCD is expected in the Union Budget 2022.
On the positives, it said clarity on BCD in Budget and expansion of the production-linked incentive (PLI) scheme to cover bidders would boost domestic manufacturing.