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ICRA: India's Renewable Energy Capacity is Expected to Increase by 8.5-9GW in Fiscal 2020
International Solar Photovoltaic Network: Recently, Indian rating agency ICRA downgraded its outlook on India's renewable energy industry from stable to negative due to the industry's difficulties and delays in project execution.The rating agency said the power sector is facing a number of headwinds, including prolonged payment delays by state-owned distribution companies, delays in project bidding over the past two years, difficulties in acquisitions and project bidding, and difficulty in securing transmission network connections and timely financing.
ICRA said it expects no growth in new capacity additions in FY2020 and will remain around 8.5-9GW similar to FY2019. This is reflected in the slowdown in wind and solar project tenders, which fell 37% to 10.6GW in the nine months of 2019 from 16.7GW in the same period last year, said Sabyasachi Majumdar, senior vice president for corporate ratings at ICRA Group. In addition, many central nodal agency tenders remain undersubscribed.
Capacity additions in FY2020 will be driven primarily by solar. However, the share of renewable energy-based generation in the overall Indian power generation mix has risen to 9.2% in FY2019, compared with 5.6% in FY2015. By FY20, the share of renewable energy is expected to be close to 10%.
This is due to the large-scale capacity additions in the wind and solar power sectors during this period, supported by the policies of the central and state governments, and the significant improvement in the tariff competitiveness of wind and solar power vis-à-vis conventional energy sources.
The average auction price for wind and solar projects in 2019 so far has remained at Rs 2.7-2.8/unit, and while this is higher than the lowest level of Rs 2.4/unit in 2018, the tariff is still below Rs 3.0/unit considering the tariff ceiling imposed by the nodal agencies.
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