Lower Auction Volumes, Supply Chain Challenges May Slowdown 20% of India’s PV Capacity Additions in ’23: IEA

Lower Auction Volumes, Supply Chain Challenges May Slowdown 20% of India's PV Capacity Additions in '23

The IEA (International Energy Agency), in its latest study, “Renewable Energy Market Update 2023 & 2024” has offered significant insights on worldwide markets in the renewable segment. The revelations of the report are as follows-

Global Renewable Capacity Additions 

As per the report, the global renewable capacity additions are set to soar by 107 gigawatts (GW), the largest absolute increase ever, to more than 440 GW in 2023. This is equivalent of more than the entire installed power capacity of Germany and Spain combined.

This unprecedented growth is being driven by expanding policy support, growing energy security concerns and improving competitiveness against fossil fuel alternatives. These factors are outweighing rising interest rates, higher investment costs and persistent supply chain challenges.

Declining module prices, greater uptake of distributed solar PV systems and a policy push for large-scale deployment are driving higher annual solar additions in all major markets – including China, the European Union, the United States and India. In contrast, without rapid policy implementation, global onshore wind additions in 2024 are expected to fall by around 5% from 2023 levels.

India’s Capacity Additions

India’s renewable capacity additions are expected to increase again in 2023 and 2024, owing to faster onshore wind, hydropower and distributed solar PV deployment. However, utility-scale solar PV projects, India’s largest
renewable electricity growth segment, are expected to slow briefly this year due to supply chain challenges, lower auction volumes and trade policies. While largescale PV manufacturing is emerging in India, import tariffs are causing short-term demand and supply mismatches.

In 2022, India’s utility-scale solar PV capacity additions (made up mainly of capacity awarded in auctions) reached a record-breaking 14 GW, accounting for over two-thirds of renewable energy growth in the country. For 2023, however, lower auction volumes and supply chain challenges indicate that a slowdown of almost 20% is probable, with a possible recovery in 2024.

In 2022, auction volumes dropped by one-third, with only 10 GWAC awarded, the lowest amount since 2017 and significantly below the volumes required to reach the national target of 500 GW of non-fossil capacity by 2030.

Average solar PV tariffs from 2022 auctions were 15% higher than in 2021, which discouraged distribution companies (DISCOMs) in poor financial health from signing contracts.

Future Forecast

Overall, cumulative world renewable capacity is forecast to reach over 4 500 GW at the end of 2024, equal to the total power capacity of China and the United States combined. Global renewable capacity additions could reach 550 GW in 2024 in our accelerated case, almost 20% higher than in the main forecast

EU electricity consumers are expected to save an estimated EUR 100 billion during 2021-2023 thanks to additional electricity generation from newly installed solar PV and wind capacity. Low-cost new wind and solar PV installations have displaced an estimated 230 TWh of expensive fossil fuel generation since Russia’s invasion of Ukraine, leading to a reduction in wholesale electricity prices on all European markets. Without these capacity additions, the average wholesale price of electricity in the European Union in 2022 would have been 8% higher. Another 60 GW of solar PV and wind is expected to come online in 2023, increasing displacement to almost 20% this year.

China Set to Outpace Rest of the World

By 2024, the country’s share is set to have expanded to a record 55% of global annual renewable capacity deployment. By 2024, China will deliver almost 70% of all new offshore wind projects globally, as well as over 60% of onshore wind and 50% of solar PV projects.

The report can be accessed here.