ICRA estimates renewable capacity additions to increase to 11 GW in FY22
ICRA expects around 11 GW of renewable capacity additions in the current fiscal and stated that the overall outlook for the Indian RE sector will remain stable on the back of positive factors…
India stands to generate between 10.5 gigawatts (GW) and 11 gigawatts (GW) from renewable energy in the fiscal year 2021-22 (FY22) due to an extensive pipeline of 38 GW of projects, according to rating agency ICRA.
Unfortunately, with the execution headwinds resulting from Covid-19, the addition of RE capacity in FY21 slowed to 7.4 GW from 8.7 GW in FY20.
Aside from this, the statement noted that over 20 GW of renewable energy projects were currently under consideration by various nodal agencies, providing visibility for capacity addition over the medium term.
Senior vice-president and head of corporate ratings for ICRA, Girishkumar Kadam, predicted investment in the RE sector to reach Rs 3.5 trillion over the next four years, rising from 25 percent in March 2021 to 34 percent by March 2025 owing to growing solar power capacity. A key challenge, however, remains the delays in signing PPAs and PSAs and cancelations of bids.
Kadam also claimed that given the expected rise in solar bid tariffs at upcoming auctions amid an expected rise in module prices and the introduction of basic customs duties in April 2022, the central intermediary procurers are likely to sign PPAs for the earlier awarded tenders.
Even with the rise in tariffs, the solar power tariff is predicted to stay below Rs 3.0 per unit according to ICRA.
Moreover, the credit profile of operational RE projects remains constrained by exposure to discoms in states like Andhra Pradesh, Telangana, and Tamil Nadu that are experiencing large payment overdue.
As for the overall outlook for the RE sector, ICRA stated that the outlook remains Stable on the back of factors such as continuing support from the government, high growth potential, and presence of creditworthy central procurers as intermediaries.
