Economy

Renewables: Promising project pipeline amid tepid capacity addition brings cheer

G Balachandar Chennai | Updated on March 19, 2021

The government has set a capacity addition target of 14,380 MW for this fiscal   -  istock/imacoconut

Projects worth 50.15 GW are at various stages of implementation

Even though renewable sector may well fall short of capacity addition target this fiscal, robust pipeline of capacity addition projects in implementation and bidding stages give hope.

During February, the renewables sector added 419.74 MW of capacity, taking the total capacity addition for the fiscal to 5,893 MW and cumulative installed capacity to 92.97 GW as of February 28, 2021. Solar made up 39.08 GW of the total, closely followed by wind at 38.79 GW, according to the information provided by Union Ministry of New and Renewable Energy (MNRE).

The government has set a capacity addition target of 14,380 MW for this fiscal. Solar power is expected to add about 11,000 MW (9000 MW from ground-mounted projects and 2000 MW through rooftop capacity), while wind power segment is expected to bring in 3000 MW of capacity. But not even half of the capacity target has been achieved during the 11-month period this fiscal.

Amid certain challenges faced by the sector, projects worth 50.15 GW capacity are at various stages of implementation, while projects to the tune of 27.02 GW capacity are currently under various stages of bidding.

During the month, about 1,046 MW of renewable tenders were issued and auctions were completed for 6,895 MW of solar projects. Maximum capacity of 3,150 MW was won by Adani alone, according to a report of JMK Research.

Recently, rating agency Crisil recently flagged payment risks from Discoms resurfacing for wind projects in Madhya Pradesh, Maharashtra, Rajasthan and Andhra Pradesh.

Wind power

Wind power projects, constituting nearly three-fourth of the total private renewable (wind and solar) capacity of these four states, have borne a larger share of the payment delays.

“For wind power projects rated by Crisil, the aggregate receivables period from these State Discoms has increased to about nine months from the invoice date, compared with 3-5 months on average in March 2020. For projects in Andhra Pradesh, it has stretched to as much as 18- 19 months,” according to Manish Gupta, Senior Director, Crisil Ratings.

This could put about ₹30,000 crore of debt in 9.5 GW of wind power projects at risk of delays.

Last week, the Centre approved a proposal to impose a BCD (basic customs duty) of 25 per cent on imported solar photo-voltaic (PV) cells and 40 per cent on imported solar PV modules, with effect from April 1, 2022. The decision evoked mixed responses.

While some analysts termed it as a poor decision, industry representatives felt the move would help improve the competitiveness of the domestic cell and module manufacturers.

“BCD implementation will provide the necessary impetus to create a self-sustaining ecosystem for solar equipment manufacturing in India, job-creation and reduce solar imports,” said Gyanesh Chaudhary, Managing Director of Vikram Solar.

Solar panel

Meanwhile, the industry has requested the MNRE to exempt BCD levy on units located in Special Economic Zones (SEZs) as 43 per cent of solar panel manufacturing units and 63 per cent of solar cell manufacturing units are located in SEZs. Imposition of BCD on SEZ units will impact the domestic solar manufacturing ecosystem and make them highly uncompetitive resulting in under-utilisation of capacities, loss of investment and jobs.

Published on March 19, 2021

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