New Delhi: India’s renewable energy sector is poised for a major expansion, with projections suggesting an increase of around 45 gigawatts (GW) by the fiscal year 2025, according to a report from CareEdge Ratings. This boom in capacity is attributed to a substantial project pipeline and an attractive bidding roadmap luring developers into the space.
CareEdge anticipates annual additions to the renewable energy capacity to oscillate between 20 and 25 GW over the upcoming two fiscal years, driven by a robust pipeline of over 55 GW assets in development. “We anticipate annual renewable energy installations to hit around 20 GW in fiscal year 2024, primarily from solar, followed by over 25 GW in the subsequent year, culminating in an overall increase of 45 GW over the next two fiscal years,” the report stated.
A key catalyst in the expected surge of solar capacity is the one-year suspension of the approved list of module manufacturers (ALMM). This hiatus is seen as especially beneficial for over 25 GW of untapped solar capacity, where the settled tariff is below Rs. 2.5 per unit. The extension until March 2024 provides developers with added flexibility in wrapping up projects under construction.
Moreover, the report underscores a positive trend in solar module prices, witnessing a considerable drop from 28-30 cents per watt to 21-22 cents per watt. This reduction is projected to facilitate the installation of renewable energy capacity across India.
Additionally, the commissioning of domestic module manufacturing capacity exceeding 50 GW is projected to result in annual foreign exchange savings of approximately Rs. 90,000 crore. This development will reduce dependence on imported modules and contribute to the government’s Make in India initiative.
The report also emphasizes the government’s focus on promoting pumped storage projects. The aim is to set up 26.7 GW of storage capacity by fiscal year 2032. The cumulative capital expenditure dedicated exclusively to the storage component is estimated to be around Rs. 1.6 lakh crore, requiring debt financing of approximately Rs. 1.2 lakh crore.
Jatin Arya, associate director at CareEdge Ratings, said, “The government’s strong policy focus continues to drive the growth of the renewable energy sector. In addition to outlining a positive bidding trajectory, the government has recognized the challenges faced by developers, including the low availability of domestic modules and high module prices. To address these concerns, the government has announced a timeline extension until March 2024 for under-construction projects and a suspension of the Approved List of Module Manufacturers (ALMM) until March 2024, providing developers with the necessary flexibility. Furthermore, the overall macro environment is becoming more favorable for developers, as module prices have significantly decreased.”
