Research and ratings agency ICRA stated today: “The projects awarded by the central nodal agencies and state distribution utilities in Calendar year 2017 and 2018 provide a reasonably healthy visibility for RE capacity addition in FY2019 and FY2020 with expected addition of about 9 GW in FY2019 and about 10 GW in FY2020.”
The capacity addition is expected to increase the share of renewable energy in the country’s overall generation to 10% by 2019-20 and further to 13% by 2021-22 based on the capacity addition forecasts.
The share of renewable in the overall generation mix has risen from 5.6% in 2014-15 to 7.8% last fiscal. This was mainly owed to the large-sized capacity addition in the wind and solar power segments during this period on the back of policy support from the government and the improved tariff competitiveness of wind and solar power against conventional power sources.
The renewable sector is still exposed to short-term challenges that have arisen due to the cost impact of safeguard duty and rising interest rates, couples with transmission network availability, said ICRA. The average bid tariffs discovered in the auctions for wind and solar in 2018 has so far remained stable.
“This uptrend in bid tariffs was partly driven by factors such as cost headwinds arising from rising interest rates, increase in capital costs due to imposition of taxes and duties, rupee depreciation against dollar for imported equipment; and rising equipment costs,” the agency stated.
Amid the imposition of safeguard duty, the recent order issued by the Central Electricity Regulatory Commission (CERC) approving the GST claims raised by solar power developers is a positive development for the sector.
ICRA, on the other hand, stated a time lag in implementation of such pass-through of cost increases cannot be ruled out, given the resistance shown by the end off-takers in such cases in the past.