The installed capacity in renewable energy could rise by just 40GW to 104GW by FY22 from 64.4 GW in FY19, 42 percent short of the government’s target of 175GW because of policy uncertainty and tariff glitches.
“The sector has witnessed a material waning of developer interest last fiscal. A sizeable 26 percent of the 64GW of projects that were auctioned by the Centre and states received no or lukewarm bids, and another 31 percent faced delays in allocation after being tendered,” says a report by rating agency Crisil.
While allocation of projects have slowed down, both under subscriptions and cancellations of awarded tenders have also increased.
As a result, the ratio of auctioned or awarded projects to tendered projects plunged to 34 percent in FY19 from 77 percent over FY16 and FY17.
“The overall tendering of solar PV projects has slowed down with the solar capacity addition in six months of FY20 remaining subdued at 2.9GW,” another rating agency ICRA said in its report.
The slowdown in capacity addition has already slowed down with just 6.5GW being added in FY19 against 9.4 GW in FY18.
“On a calendar year basis, the overall tendering action is lower by 28 percent in nine months of 2019 to about 7 GW on y-o-y basis with many bids remaining undersubscribed,” ICRA said.
Policy uncertainty short-circuits RE goals
CRISIL Research believes that the unstable policy environment poses a big risk for the country’s RE targets.
“There is growing incoherence between the policy thrust on RE, on the one hand, and the actual action by implementation agencies like the Solar Corporation of India (SECI) and state distribution companies, on the other,” the Crisil report says citing the ongoing tariff renegotiation in Andhra Pradesh.
This story is from the October 2019 edition of Coal Insights.
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This story is from the October 2019 edition of Coal Insights.
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