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Power capacity additions slow down in 2018-19

G Balachandar Chennai | Updated on April 30, 2019 Published on April 30, 2019

Policy issues and cancellation of projects impact conventional and renewable sectors

The power sector, both conventional and renewables, witnessed poor capacity addition during 2018-19 after maintaining a strong momentum for a few years.

While renewables added more capacity than the conventional power segments for the second year in a row in 2018-19, both have seen a significant fall in their new capacity addition compared with 2017-18.

The renewable energy sector added a capacity of 8,532 MW to the grid, just about the 55 per cent of its target of 15,602 MW for 2018-19. In the previous two years, the renewable sector added new capacity in the range of 11,000-12,000 MW per year, supported by a boom in the solar power sector.

Key factors

Industry experts blamed the government’s policy reversal, lack of clarity in certain policy issues and arbitrary cancellations of renewable project tenders for the slow down in the capacity addition in the clean energy sector during 2018-19. Safeguard duty and transmission-related constraints were also cited among other reasons.

In 2018-19, the conventional power sector also saw one of its lowest capacity additions in recent years.

The combined new capacity of thermal and hydro sectors stood at just 5,922 MW against 9,505 MW in 2017-18.

The thermal sector added 5,782 MW in FY19 against 8,710 MW in 2017-18, while in the hydro sector, new capacity was lower at 140 MW when compared with 795 MW. In 2016-17, conventional power segments added a total capacity of 14,209 MW.

“Conventional power capacity additions will slow down over the next five years and the private sector is set to suffer the most. The situation is likely to improve post fiscal 2020 with robust demand growth and slower capacity additions expected to improve plant utilisations, according to a recent report of Crisil.

Total capacity

 

As of March 31, 2019, the total installed capacity of all energy sources put together stood at about 356 GW (excluding captive power capacity of 51.5 GW), the thermal sector accounted for 226 GW, followed by renewables at about 78 GW, hydro at 45 GW and nuclear at about 7 GW.

Meanwhile, industry analysts present a bright outlook for new capacity addition in the renewable sector.

Though 2019 is an election year and politics may dominate reforms and concrete action for most of the year, the renewable sector is expected to add a total capacity close to 16 GW during the year, supported by utility-scale solar projects, according to Bridge to India, a renewable energy consulting firm.

Based on various projects under execution and current implementation status, it predicts an all-time high in utility-scale capacity addition in 2019, crossing 10,000 MW mark for the first time ever.

Rating agency ICRA also expects the solar segment to add about 7.5 GW during this fiscal though some policy issues remain critical.

Published on April 30, 2019
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