India Likely To Add 45 GW Of New Renewable Capacities By 2025: Report

A latest report by CareEdge ratings claimed that India is likely to add 45 Gigawatt (GW) of new renewable energy capacities in the next two fiscals. The rating agency said the estimates were based on the healthy project pipeline and a strong bidding roadmap laid by the government.

The report also sheds light on the challenges in the growth of non-fossil fuel energy in the country and the associated capital expenditure required to fulfill such ambitions. According to the report, the country will see an installation of 20 GW by the Financial year (FY) 2024. It also said that in FY25, India would add 25 additional capacities of renewable power, increasing renewable energy’s cumulative growth to 45 GW in the next two years.

The report said that the plunge of module pricing from 28-30 cents per watt to 21-22 cents per watt could pave the way for implementing over 25 GW of unimplemented solar capacity projects with bids below Rs 2.5 per unit.

The rating agency also talked about the forex savings in India due to increased local production of solar modules and sales with the intervention of the government’s PLI (Production Linked Initiative) scheme for solar module manufacturing, which targets.

The PLI scheme has allocated approximately Rs. 18,000 crore. It is likely to aid in the establishment of a fully integrated module manufacturing capacity (from polysilicon to module) of 27.4 GW, a deeply integrated module manufacturing capacity (from wafer to modules) of 16.8 GW, and a partially integrated module manufacturing capacity (from cell to modules) of 7.4 GW.

“This capacity is expected to be commissioned between FY24 and FY27. According to estimates by CareEdge Ratings, given the prevailing module prices, the commissioning of this domestic capacity is anticipated to result in annual forex savings of approximately Rs. 90,000 crores,” the report said.

The rating agency meanwhile also said that although the National Electricity Plan (NEP) talked about 26.7GW of pumped storage projects and 47.2GW of Battery energy storage systems, it would require capex of upto for Rs 1.6 lakh crore for PSPs alone.

“The energy storage component for PSPs alone would require capital expenditure (capex) of approximately Rs. 1.6 lakh crore, with a potential increase of approximately Rs. 2.1 lakh crore if additional PSPs of up to 8 GW are needed to compensate for lower BESS installations,” the report said.

The report also said that per its estimates, the annual open access installations in India remained below 3.5 GW, far from the cumulative installations reaching 13.6 GWp and accounted for 9 to 10 percent of the overall renewable power installed capacity.

“The C&I market presents significant growth opportunities for the renewable sector, and implementing these norms is expected to bring much-needed transparency, reliability and attract additional private investments. Going forward, annual open-access installations are projected to remain within the range of 4 to 5 GW for the next two to three years,” the report said.

Jatin Arya, Associate Director of CareEdge Ratings, claimed that supportive measures like energy storage, local manufacturing, and open access seemed promising for the growth of renewable energy in the country.

“According to the National Electricity Plan (NEP) released by the Central Electricity Authority (CEA), the annual power capacity addition is projected to be around 50 GW for the next nine years, primarily driven by the renewable energy segment. This is expected to attract an average annual capital expenditure (capex) of approximately Rs. 3 lakh crore and debt allocation of approximately Rs. 2.25 lakh crore,” he said.

He also added, “Nonetheless, uniform adaptation of the open access rules across states with no major traction in module prices would be the prerequisites to realize the potential.”