New Delhi: The installed Renewable Energy (RE) capacity in India, excluding large hydro plants, is set to witness a substantial increase, reaching 170 GW by March 2025 from its December 2023 level of 135 GW, as per the assessment of rating agency ICRA released on Friday. ICRA highlighted that this growth is expected to significantly elevate the share of RE plus large hydro in the overall electricity generation in India from approximately 23 per cent in FY24 to around 40 per cent in FY30.
Recognizing the intermittent nature of RE generation, ICRA emphasized the significance of ensuring Round-The-Clock (RTC) supply from RE sources. It suggested achieving this through the integration of wind and solar power projects with energy storage systems.
According to ICRA’s statement, the installed RE capacity, excluding hydro energy, is anticipated to surge to about 170 GW by March 2025 from 135 GW in December 2023. Subsequently, capacity additions are expected to be supported by a considerable improvement in tendering activity in the current fiscal year, with over 16 GW projects bid already and another 17 GW bids underway by central nodal agencies. This aligns with the 50 GW annual bidding trajectory announced by the Government of India in March 2023.
Girishkumar Kadam, Senior Vice-President and Group Head, Corporate Ratings, ICRA, remarked that tariffs discovered in the RE-RTC tenders remain higher compared to standalone solar and wind energy tenders. Recent RTC bid tariffs have been observed in the range of Rs 4-4.5 per unit, primarily due to the costs associated with the storage component and the expected higher share of wind energy component.
Despite these challenges, ICRA anticipates an improvement in RE capacity addition to 18 GW to 20 GW in FY24 from 15 GW in FY23, attributed to the sharp decline in solar PV cell and module prices, suspension of the Approved List of Module Manufacturers (ALMM) order until March 2024, and the approved timeline extension for solar and hybrid projects. This, combined with the growing project pipeline, is expected to support a capacity addition of 23-25 GW in FY25, primarily driven by the solar power segment.
However, ICRA highlighted challenges in the execution front, particularly delays in land acquisition and transmission connectivity, which could hinder capacity-addition prospects.
Kadam also noted the significant decline in solar PV cell and module prices over the past year, leading to a healthy improvement in debt coverage metrics for upcoming solar power projects. However, developers remain exposed to fluctuations in imported solar PV cell and wafer prices until fully integrated module manufacturing units are established in India.
Furthermore, ICRA stated that state distribution utilities (discoms) have exhibited improved discipline in making payments to power generators, including RE IPPs (Power Producers), following the implementation of late payment surcharge rules in June 2022.
