In August 2018, CRISIL had pinned India’s cumulative installed solar power capacity at the end of fiscal year 2023 between 78 GW to 80 GW. Following a lax and unclear government policy stance, it has now reduced the guidance to 70 GW, expecting capacity additions of 48 GW to 50 GW between fiscal years 2019 and 2023. (Source: CRISIL Research)
- As against the 100 GW of solar power capacity target India is chasing to be achieved by FY 2022, CRISIL says it sees only 60 GW achieved till then and 70 GW by fiscal 2023
- Rooftop solar power capacity will go up to 8 GW in total, while the original target is 40 GW by 2022
- Lack of policy clarity from the government on various issues as GST, safeguard duty and arbitrary bid cancellations are hurting developer sentiment
- Inconsistency of government actions has been detrimental to capacity addition momentum, keeping developers away from participating in auctions as well
- Positive policy changes are also on the anvil from the government but their implementation and enforcement is critical for the growth of this industry in India, according to the CRISIL report
Renewable Energy Projects Worth 480 Billion INR ($7.5 Billion) In India Face Risk Of Tariff Renegotiation From DISCOMs, According To CRISIL
(29. August 2017)
‘Cloud over 100 GW target’. This title of a research released by analytics firm CRISIL sums up the overall sentiment of the work in the context of the100 GW solar target to be achieved by 2022, as envisioned by the Government of India. CRISIL Research expects solar power capacity additions of only 48 GW to 50 GW between fiscal year (FY) 2019 and 2023.
Cumulative installed capacity at the end of fiscal year 2022 is expected to be 60 GW, and by 2023, it will go up to 70 GW, according to CRISIL Research. Rooftop solar projects of around 8 GW are anticipated to be commissioned by FY 2023, led by high industrial and commercial tariffs and declining levelized cost of energy for such projects. The cumulative number is even less than the range of 78 GW to 80 GW to be achieved by FY 2023 projection CRISIL published in August 2018 (see Crisil: India To Reach Only 80 GW PV By 2022).
Reasons for the downward revision of projected capacity additions include lack of clarity on several policy issues as India’s goods and services tax (GST) where clarity was lacking for over a year, safeguard duty shooting up costs of solar power projects by 10% to 15% and arbitrary bid cancellations (between March 2018 and December 2018 close to 4.7 GW was cancelled), which it points out is ‘contrary to a supportive policy stance’ expected from the government.
Moreover, India’s safeguard duty hasn’t really resulted in any ‘significant offtake’ for the domestic manufacturing sector as was the intent behind it.
The inconsistency of government actions has negatively impacted developer sentiments, which consequently has slowed down the momentum of capacity additions and discouraged participation in auction activity.
Critical to the growth of the solar industry in a market like India is regulatory support, which CRISIL sees as a ‘key risk’. But, the good news is that the government remains ambitious about achieving the 2022 target which has brought in positive policy changes, such as a higher Renewables Purchase Obligation (RPO) target that was increased from 8% to 10.5% by FY 2022, waiving off of interstate transmission charges till the target year. Yet, implementation and enforcement of these policies is what will decide the final outcome.