Renewable capacity addition slows down in 2018-19

The pace of adding renewable generation capacities slowed down in FY19 with just 8.6 gigawatt (GW) of solar and wind power plants getting commissioned in the fiscal. The country had added 11.3 GW and 11.8 GW of renewable capacities in FY17 and FY18, respectively. The installed renewable capacity now stands at 77.6 GW.

Experts have attributed the situation to devaluation of the rupee, rising finance costs, government-mandated tariff caps in reverse auctions and cancellation of renewable project tenders as the reasons behind slowing down capacity installation. Also, as recently noted by renewable research firm Bridge to India, “private sector response (in the renewable sector) has dimmed in response to poor tender design, low tariff expectations and transmission sector bottlenecks”. Issues such as GST, safeguard duty and mandatory BIS standards have also discouraged developers to an extent.

As much as 41 GW of renewable energy projects have been tendered in the first three quarters of FY19, while nearly 17 GW of tenders have been cancelled at the same time, mostly due to muted response from project developers. At the end of Q3FY19, nearly 18 GW of solar projects were under various stages of development. The country plans to have 175 GW of installed renewable power capacity by FY22. The target, however, now seems achievable as 45 GW of hydro power plants would now be counted as renewable energy after a recent Cabinet decision.

Overall, the country’s installed power generation capacity stands at 356 GW, rising only 3.5% year-on-year in FY19, the slowest growth rate since FY09. The net capacity addition of thermal power plants in FY19 on a net basis — the difference between the plants commissioned and retired — is a meagre 3.4 GW, one of the lowest in history.

As reported earlier by FE, the sharp deceleration in commissioning of new capacities over the past few years would alter the demand-supply dynamic in the short run, analysts said, with some of them predicting a supply shortage scenario by FY23. Since the peak demand comes during the evening hours, the existing and upcoming solar plants would be useless in catering to the emerging needs because they are not equipped with storage facilities that are expensive.

sources@Financial Express