The renewable energy sector reported a record capacity addition of over 11 gigawatt (gw) in fiscal 2017, an increase of around 60% over the previous year. The addition is neck and neck with thermal power capacity addition of 11.5 GW in FY2017, which has declined from the peak capacity addition of 22.5 gw in FY2016. According to the Ministry of New & Renewable Energy (MNRE), the record capacity addition was on account of wind and solar additions at 5.4 GW and 5.5 GW, respectively. The capacity ramp-up was aided by favourable policy and a regulatory framework, shorter gestation period and the improving tariff competitiveness of solar photovoltaic energy. A major portion of the wind energy capacity addition during the last fiscal was driven by new projects in Andhra Pradesh (2190 mw), Gujarat (1275 mw) and Karnataka (882 mw). The capacity addition in the solar power segment were driven by new projects in Andhra Pradesh (1294 mw), Karnataka (882 mw) and Telangana (759 mw).
An analyst said that solar energy has already gained momentum, and in the years to come the renewable market will only become more competitive due to government’s effort and target for larger share of clean power. One of the examples of improving tariff competitiveness was the recent auction for solar energy, wherein solar tariffs in India fell to another record low of Rs 3.15 per Kilowatt-Hour (kwH). Earlier this month, in an auction of 250 mw at the Kadapa Solar Park in Andhra Pradesh, the winning bid made by Solairedirect Energy India at Rs 3.15 kwH.
Prior to this, in February, another lowest tariff was achieved in an auction by Madhya Pradesh’s Rewa Solar Park at Rs 2.97 per kwH for 750 mw in the first year, followed by price escalation of five paise per year for 15 years. The levelised tariff stood at Rs 3.30 per unit. According to India Ratings & Research, solar power will reap the maximum benefit of refinancing options. “Ind-Ra believes that the renewable energy sector (especially solar energy) would reduce its borrowing costs further by at least 100 basis points through bond issuances or bank loans,” said a recently released report.
“The sector is also likely to be benefited from the government’s thrust on the development of the
second phase of 20 GW solar energy and evolving payment security mechanisms. However, the limited improvement in the current issues such as grid curtailments, receivable days, plant load factor volatility could hinder the refinancing prospects for renewables,” added their report. On the other hand, “Indian wind energy sector witnessed a record installation of 5,400 mw in FY17, registering a 60% growth as against 3,400 mw in fiscal 2016. With this addition, the total installation of wind moved from 27 gw to 32 gw,” read a recent blog of Tulsi Tanti, chairman & managing director, Suzlon Group. He said, “We are very confident that in FY18 the wind industry will deliver 6,000 MW of new capacity.” “The capacity addition in wind energy was much better than our expectations due to a bunching up of commissioning in March 2017,” said Sabyasachi Majumdar, senior vice-president & group head, Icra Ratings.