Renewable sector adds highest-ever quarterly capacity during June quarter 

Chennai, July 15 

The Indian renewable energy sector has added its highest-ever quarterly new capacity during the first quarter of this fiscal, driven by the solar power sector. 

During April-June 2022 period, the renewable energy sector added a new capacity of 4,179 MW, which is the highest-ever quarterly addition in the sector, as compared to 2,522 MW (the previous highest capacity addition) in the year-ago quarter, an increase of 66 per cent.  

Solar power

Solar remains the mainstay of the renewable new capacity addition and it added 3,709 MW during Q1 of this fiscal as compared to 2,249 MW in the year-ago quarter. During this June quarter, the wind power segment added 430 MW (240 MW) of new capacity.  

“We expect the RE capacity addition in this fiscal to remain at 15-16 GW, given the strong project pipeline of above 50 GW as of now aided by project awards over the last two-year period in utility IPP segment, also supported by the capacity addition expected in commercial and industrial PPA segment. Overall, investment prospects in the renewable sector over the long run remain solid, with the supportive policy of the government as well as significantly improved tariff competitiveness of both solar & wind energy,” Girishkumar Kadam, Senior Vice-President & Co-Group Head - Corporate Ratings, ICRA Ltd.

While the Centre had set a total capacity addition target of 175 GW of renewable power by this year-end, it has raised the capacity target to 500 GW to be achieved by 2030 to boost the renewable energy (RE) installation over the long term.   

As of June 30, 2022, the total grid-connected capacity of renewables stood at 114 GW. Of this, the solar power segment accounted for 57.71 GW, followed by wind power at 40.79 GW and bio power at 10.21 GW. The small hydro segment accounted for 4.89 GW.  

“The gap in meeting 175 GW by the end of 2022 was anticipated much earlier, due to shortfalls expected in the wind energy segment as well as in the roof-top segment. Further, the execution bottlenecks during Covid lockdown constraints in FY21, impacted the RE capacity addition too,” said Kadam. 

Rupee impact

Meanwhile, an increase in solar PV cell & module prices along with the imposition of basic customs duty on imported cells & modules, coupled with a hardening in interest rate and rupee depreciation against USD is leading to cost pressure for solar power projects awarded over the last 12-18 months.  

While the bid tariffs have increased from the lows of ₹1.99 per unit in December 2020 to ₹2.2-2.5 per unit, the extent of the increase in bid tariffs remained lower than what was estimated to mitigate the increase in module prices.  

“The risk of moderation in returns is significant for projects aggregating to 4.4 GW awarded over the past 18 months, wherein the tariffs are below ₹2.2 per unit. Also, the timely availability of modules from notified vendors under the ALMM (Approved List of Models and Manufacturers) framework which has only domestic OEMs as of now, remains critical for the capacities that are likely to be commissioned in the near term. With the prevailing cost pressures & ALMM requirements for sourcing of modules, the risk of project delays in the near term cannot be ruled out,” said Kadam.  

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