New Delhi: India will add another 38 Gigawatt (GW) of renewable energy (RE) capacity by March 2025 to touch the 170 GW-mark, aided by moderation in solar module prices, an ICRA analyst said on Thursday. The country's installed renewable energy capacity was at 130 GW as of October 2023, Vikram V, Vice President & Sector Head - Corporate Ratings, ICRA, said in a webinar.

India's Renewable Energy (RE) capacity is expected to reach 170 GW by March 2025, led by strong policy support and moderation in solar module prices, he said.

RE capacity addition likely to be supported by significant tendering

The capacity addition thereafter is likely to be supported by the significant improvement in tendering activity in the current fiscal with over 16 GW projects bid out so far and another 17 GW bids underway by the Central nodal agencies, Vikram said. The share of RE-based round-the-clock (RTC) projects is expected to rise in upcoming tenders to mitigate the intermittency risk associated with renewables. This is in line with the 50 GW annual bidding trajectory announced by the government in March 2023.

He further said that the sharp decline in solar PV cell and module prices by 65 percent and 50 percent, respectively, over the past 12 months is leading to a healthy improvement in debt coverage metrics for the upcoming solar power projects.

While this is positive in the near term, the developers would remain exposed to movement in imported solar PV cell and wafer prices, till the development of fully integrated module manufacturing units in India.

The rise in the renewable energy capacity over the next six years is estimated to increase the share of RE plus large hydro in the all-India electricity generation from 23 percent in FY23 to around 40 percent in FY30.

Given the intermittency associated with RE generation, the availability of RTC supply from RE sources remains important. This can be made possible through the use of wind and solar power projects complemented with energy storage systems.

The state distribution utilities (discoms) have also shown an improved discipline in making payments to power generators, including RE IPPs (Independent Power Producers), following the implementation of the late payment surcharge (LPS) rules in June 2022.

Discoms in most key states have been clearing dues within three months from the billing date to RE IPPs for the past 15 months. Moreover, the past dues are being cleared through installments under the LPS scheme.