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In view of the strong pipeline of 55 GW clean energy projects, rating agency ICRA has said the country's renewable energy capacity addition is estimated to touch 16 GW in the next financial year (FY23). It stated the outlook for the capacity addition in the Renewable Energy (RE) sector remains strong with a large project pipeline of over 55 GW and the highly competitive tariffs offered by these projects. The capacity addition witnessed a strong recovery in the first eight months of FY2022 (April to November 2021) with 8.2 GW added against 3.4 GW added in the the year-ago period.

The rating agency mentioned that it expects RE capacity addition to increase from 7.4 GW reported in FY2021 to 12.5 GW in FY2022 and further to 16 GW in FY2023.  This is also supported by the progress shown by the Solar Energy Corporation of India (SECI) in signing of power sale agreements and power purchase agreements in the last six months. Within the RE capacity, the addition would be driven by the solar segment followed by the wind and hybrid segments. The downside risks for renewable energy sector in the near term emanate from the execution headwinds and supply chain challenges for procuring modules and wind turbine generators.

It noted that the average price of imported solar PV modules (Mono PERC) has increased by over 35 per cent over the past 12 months, putting upward pressure on capital costs for solar power projects.  It pointed out notwithstanding the same and the recent hike in GST (Goods and Services Tax) rate for solar power equipment, the solar bid tariffs continue to remain highly competitive as seen from the quoted bid tariff of Rs 2.17 per unit in December 2021. On the other hand, it stated the wind segment continues to witness subdued capacity addition owing to execution headwinds, financing challenges for few developers and weak financial profile of some of the OEMs (Original Equipment Manufacturers) leading to supply side constraints.