India’s renewable energy capacity is expected to reach 170 GW by March 2025, led by strong policy support and moderation in solar module prices
India is poised to augment its renewable energy capacity by an additional 38 gigawatts (GW) by March 2025, reaching a noteworthy 170 GW, as outlined by an Icra analyst.
The existing renewable energy capacity in the country stood at 130 GW as of October 2023, according to Vikram V, Vice President & Sector Head - Corporate Ratings at Icra.
This anticipated surge in renewable energy capacity is attributed to a combination of factors, including robust policy support and a decline in solar module prices. The moderation in solar module prices, along with strong policy backing, is expected to propel India's renewable energy capacity to the projected 170 GW by March 2025.
Furthermore, the capacity expansion is anticipated to receive continued support, with a notable uptick in tendering activity in the current fiscal year. Over 16 GW of projects have already been bid out, and an additional 17 GW bids are in progress under the central nodal agencies.
To address intermittency concerns associated with renewable energy, there is a projected rise in the share of round-the-clock (RTC) projects in upcoming tenders. This aligns with the Indian government's announcement of a 50 GW annual bidding trajectory in March 2023.
The recent substantial decline in solar PV cell and module prices, by 65 percent and 50 percent respectively over the past year, is contributing to improved 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.
The surge in renewable energy capacity over the next six years is forecasted to elevate the share of renewable energy, including large hydro, in the overall electricity generation from 23 percent in FY23 to approximately 40 percent in FY30.
To address the intermittency challenge, the integration of wind and solar power projects with energy storage systems is highlighted. Moreover, the discipline shown by state distribution utilities (discoms) in timely payments to power generators, including renewable energy independent power producers (IPPs), is noted.
The implementation of the late payment surcharge (LPS) rules in June 2022 has played a role in this positive trend, with discoms clearing dues within three months from the billing date and addressing past dues through installments under the LPS scheme.