Renewable energy sector adds 4,273 MW in H1

Even as industry analysts warn of slowdown in the renewable energy sector, the segment has added 4,273 MW of new capacity to the grid during the first half of this fiscal, which is one of the highest additions in a first-half year period in the last several years.

However, the addition to capacity during the April-September 2019 is only 36 per cent of the target (11,802 MW) set for the fiscal.

Major contributor

Solar power segment continues to be the major contributor of new capacity growth in the renewable energy sector with a share of more than two-thirds of the new capacity.

It added 2,921 MW (includes 2,479 MW ground-mounted and 442 MW rooftop) capacity during April-September 2019, according to the Union Ministry of New and Renewable Energy (MNRE).

Progress in wind power

Wind sector continues to show progress and it added about 1,304 MW of new capacity. During the last fiscal, this segment added 1,481 MW and this year it is expected to add more capacity.

As on September 30, 2019, total grid-connected installed renewable power capacity in India stood at 82,589 MW.

The total installed capacity of wind power stood at 36,930 MW. The fast-growing solar segment had a cumulative installed capacity of 31,101 MW (Ground-mounted: 28,863 MW; Rooftop: 2,238 MW).

Slipping into a slowdown

Industry analysts have warned that the clean energy sector is slipping into slowdown mode though the government is ambitious about its targets in the sector.

A few days ago, MNRE said, in a clarification, that the government of India has set a target of installing 175 GW of grid connected renewable power capacity by December 31, 2022.

Shortfall in target

However, a Crisil report has warned that India’s installed capacity in renewable energy could increase by just 40 to 104 GW by fiscal 2022 from 64.4 GW in fiscal 2019, because of enduring policy uncertainty and tariff glitches.

This means the sector will be 42 per cent short of target.

The sector has witnessed a material waning of developer interest last fiscal. Little over a fourth of the 64 GW of projects that were auctioned by the Centre and States did not receive bids or response was lukewarm and 31 per cent faced delays in allocation after being tendered.

“Thus, despite the increase in tendering volume, not only has allocation of projects slowed down, but both under-subscriptions and cancellations of awarded tenders have also increased,” according to Miren Lodha, Director, Crisil.

Tariff concern

Government has to relax the tariff caps as this could help improve the viability and attract new players. On the other hand, if solar tariffs remain capped at ₹2.5-2.6 per unit, the market could continue to be confined to a few developers, who may be constrained to invest in fresh expansion.

Also, the government needs to provide a consistent and stable policy environment to restore developer confidence.