Mumbai: India will add 10GW of renewable energy generation capacity in FY20, a note from ratings and research agency ICRA said on Tuesday. The comparable figure for FY19 is 9GW.

In its note, ICRA maintained a year-end stable outlook for the domestic renewable energy sector due to large-sized capacity addition particularly in the wind and solar power segments, driven by policy support from central and state governments as well as the significantly improved tariff competitiveness of wind and solar power vis-a-vis conventional power sources.

Sabyasachi Majumdar, group head - corporate ratings, ICRA, said: “The project awards by the central nodal agencies and state distribution utilities in CY2017 and CY2018 (YTD) provide a reasonably healthy visibility for RE capacity addition in FY2019 and FY2020 with expected addition of about 9GW in FY2019 and about 10GW in FY2020.

The government has set an ambitious target of reaching 100GW of solar power generation capacity and 227GW of renewable energy capacity by 2022, while total renewable capacity in India is just over 70GW today.

For the next fiscal, however, Majumdar said the share of RE in the all India generation “will increase to 10% by FY2020 and further to 13% by FY2022 based on capacity addition forecasts, as per our estimates."

Nonetheless, the wind and solar segments remain exposed to near-term challenges arising due to cost impact of safeguard duty and rising interest rate, coupled with transmission network availability. The average bid tariffs discovered in the auctions for wind and solar power projects in CY2018 has so far remained at 2.6-2.7 per unit, increasing slightly from the low of 2.4 per unit. This uptrend in bid tariffs was partly driven by factors such as cost headwinds arising from rising interest rates, increase in capital costs due to imposition of taxes/duties, rupee depreciation against dollar for imported equipment; and rising equipment costs. Notwithstanding these cost pressures, wind & solar PV energy projects are likely to remain cost competitive against conventional power sources, the note added.

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