In the face of lingering issues of land acquisition, uncertainty over taxes and import duties and slowdown in overall economic growth India has reduced its solar power capacity addition target to the lowest level in four years.
The Ministry of New and Renewable Energy (MNRE) recently announced the capacity addition target for solar power in the financial year 2019-20. India aims to add 8.5 gigawatts of solar power capacity between April 2019 and March 2020, including 1 gigawatt of rooftop solar power capacity. The target is 23% lower than that set for the previous financial year, 2018-19.
In 2018-19 the MNRE had set a target of 11 gigawatts but only 6.5 gigawatts, or 59% of the target capacity, was actually installed. At the end of 2018-19, India’s operational solar power capacity stood at 28.2 gigawatts. In 2017-18 only 4.7 gigawatts of capacity was added against a target of 10 gigawatts. Similarly, in 2016-17, 5.5 gigawatts of capacity was added against a target of 12 gigawatts.
The sharp decline in target for 2019-20 seems to indicate that the government, too, has recognized the challenges faced by project developers, even in those cases where projects have already been auctioned and allocated.
Large capacities of solar power projects were cancelled at the state as well as central levels. The Solar Energy Corporation of India (SECI) reduced the size of several solar power tenders, delayed others, and cancelled 2.4 gigawatts of capacity in the country’s largest solar power tender ever. Similarly, the state of Gujarat cancelled solar power auctions multiple times over the last few months.
Such actions have led to developers not participating in solar (as well as wind) power auctions altogether. We have extensively covered the under-subscription of several large-scale solar power projects in recent months.
India has set a goal to have an operational solar power capacity of 100 gigawatts by March 2022. With just 34 months left to achieve that target, India must add over 71 gigawatts, at an extremely aggressive monthly average of 2 gigawatts.
With the return of the Modi government in recently concluded general elections, project developers could expect some relief with regards to the uncertainty and slow pace of project execution due to external factors. With the elections over SECI is expected to issue a large number of solar power tenders and also work with state governments to hasten process of land acquisition.
Thus, one can expect the targets for 2020-21 and 2021-22 to be significantly higher than previous years.