- A Moody’s company, ICRA forecasts 27.5% increase in overall renewable capacity addition in India in 2016-17 on YoY basis
- Out of the total 6.9 GW added to the grid, solar capacity addition in 2015-16 was over 3 GW, while wind added 3.3 GW
- Most solar power capacity additions in 2015-16 came from the southern part of the country
- ICRA points out that actual solar capacity addition in 2016-17 would depend on how soon the IPPs achieve financial closure of projects and signing of PPAs
- An earlier ICRA forecast of 5.7 GW new solar is much lower than the 12 GW the government plans to add this year
India will add 8.8 GW of renewable energy in 2016-17, an increase of 27.5% over 6.9 GW added online last fiscal year, says ICRA. This would take the overall capacity of the country to 51.5 GW, which as of March 2016 stood at 42.7 GW. Solar power would be the key driver, according to the estimate by ICRA, an independent and professional credit rating agency of Moody’s.
Record capacity addition in 2015-16
The clean energy sector connected 6.9 GW to the national grid last fiscal year. The dominant renewable source continues to be wind power – with at total share of 62.6%, followed by solar at 15.8%. The share of renewable energy in overall generation capacity of India went up to 14.1% in 2015-16, increasing from 13.2% in 2014-15. Solar, which forms a major chunk of the total target of 175 GW of renewable energy capacity addition by 2022, added 3,019 MW in the last fiscal year (see India Overachieves Target). This, says ICRA, is 171% more than the capacity addition of 1,112 MW in the previous fiscal year. The largest capacity additions were seen in the states of Andhra Pradesh, Madhya Pradesh, Tamil Nadu and Telangana.
Stating some of the factors that has led to this growth, Senior Vice President of ICRA, Sabyasachi Majumdar, said, “The share of solar energy capacity within the RE segment has increased considerably largely aided by sizeable capacity additions from FY2012 onwards led by favourable policy support both by Central Government as well as at State level and improving regulatory framework. In addition, reduction in capital costs for solar power projects resulting in improved cost competitiveness also played a role in driving the capacity additions.”
Solar to drive renewable energy growth in current fiscal year
In March 2016, ICRA had predicted the country will add 2.7 GW of solar power capacity, and in 2016-17 it will add 5.7 GW (see ICRA estimates 5.7 GW of solar by 2017 in India). This will also be the first year since 2011 when solar capacity addition is expected to be higher than wind power, which so far has always stayed above PV in India. ICRA says wind will add only 2.5 GW in 2016-17, down from 3.3 GW added in the previous year.
ICRA’s 5.7 GW number is much lower than the 12 GW MNRE is expecting to add. The rating agency’s Majumdar points out that transmission challenges and counterparty credit risks, which affect signing of PPAs and timely payments, could pose challenges for the sector. Bids for solar power auctions of late have gone to new lows, hovering at less than 5 INR ($0.08) per kWh. Majumdar says that there are concerns regarding viability of such projects and that ‘actual solar capacity addition would hinge on timeliness in achieving the financial closure by IPPs, as well as in signing of PPAs with the buyers, viz. the state-owned utilities’.