The country aims to achieve the target of 175 GW (100 GW solar, 60 GW wind, remaining from small hydro and other sources) installed renewable power capacity by FY22.
India’s global commitments to cut its carbon footprint, falling solar rates and unlocking of potential energy demand through ‘24X7’ power schemes have been cited as the main reasons behind the record surge in solar power capacity addition in 2017. Electricity production capacities added in the solar segment surpassed coal for the first time in 2017. In fact, solar capacity added in the year (8,040 MW) was more than twice the net addition of coal power units (4,004 MW). While solar capacity reflects an annual increase of 95%, net addition of high-emitting generating capacities sharply dwindled by 75% — a screeching halt after years of aggressive addition (91,731 MW thermal units added against the original target of 72,340 MW in FY13-17).
The country aims to achieve the target of 175 GW (100 GW solar, 60 GW wind, remaining from small hydro and other sources) installed renewable power capacity by FY22. Karunesh Chaturvedi, corporate affairs head, Vikram Solar, said that renewables growth “is in line with India’s commitment to reduce carbon emission as well as makes India less vulnerable to risks posed by climate change”. About 40 GW of wind and solar generation units are to be auctioned by FY20, leaving a margin of two years to commission the projects within the deadline.
The industry believes that the anticipated rise in power demand and the FY22 target will be significant growth drivers, superseding the sporadic challenges such as irregular payments, import duty imposition, evacuation issues and renegotiation of power purchase agreement (PPA) terms faced by renewable energy. “The demand for power is and will continue to be robust as India’s economic growth story continues to unfold and this will remain the key growth driver for the sector,” Vikram Kailas, co-founder, Mytrah Energy, told FE.
A sharp reduction in solar tariffs have made it more attractive to customers. Currently, the lowest solar power rate stands at Rs 2.44/unit, a 20% CAGR fall over a seven-year period. This has driven corporates to procure solar electricity at prices lower than what discoms offer. CleanMax Solar, the largest rooftop solar developer in India, expects a threefold rise in its capacity to 300 MW in FY18, with significant demand from the corporate segment. Andrew Hines, co-founder, CleanMax Solar, told FE that “solar power is not only cleaner, but also very cost-effective for these consumers, Hines added.
“Introduction of solar park schemes and improvisation of PPA terms are also key contributors to the capacity growth witnessed in 2017,” said Basant Jain, CEO, Mahindra Susten. The company added more than 300 MW in its own solar portfolio in 2017 and executed 425-MW projects under EPC contracts for other developers.
BP Energy Outlook, 2018 predicts that renewables would become the second largest source of domestic energy production in India, overtaking gas and oil by 2020. “While coal remains the dominant fuel source, its share of generation drops from 77% in 2016 to 64% in 2040 as renewables rise from 5% to 23%,” it added.