GS Paper - 3 (Energy)

The country's renewable energy capacity addition is estimated to touch 16 GW in the next financial year in view of the strong pipeline of 55 GW clean energy projects, according to ICRA. The outlook for the capacity addition in the Renewable Energy (RE) sector remains strong with a large project pipeline of over 55 GW and the highly competitive tariffs offered by these projects, ICRA said on 10 January 2022.

What

  1. It expects RE capacity addition to increase from 7.4 GW reported in FY '2021 to 12.5 GW in FY' 2022 and further to 16 GW in FY '2023.
  2. The commitment to climate change goals announced at the recent COP26 summit, including increasing the non-fossil power capacity to 500 GW and meeting 50 percent of energy requirements from renewable sources by 2030, further strengthens the investment prospects in the renewable energy sector.
  3. The capacity addition witnessed a strong recovery in the first eight months of FY'2022 (April to November 2021) with 8.2 GW added against 3.4 GW added in the year-ago period.
  4. This is also supported by the progress shown by the Solar Energy Corporation of India (SECI) in signing of power sale agreements and power purchase agreements in the last six months.
  5. Within the RE capacity, the addition would be driven by the solar segment followed by the wind and hybrid segments.
  6. The downside risks for the renewable energy sector in the near term emanate from the execution headwinds and supply chain challenges for procuring modules and wind turbine generators.
  7. The average price of imported solar PV modules (Mono PERC) has increased by over 35 per cent over the past 12 months, putting upward pressure on capital costs for solar power projects.
  8. ICRA's outlook for the renewable energy sector remains stable, driven by the favourable policy support, superior tariff competitiveness, large untapped potential and the presence of strong intermediate procurers like SECI.