India’s renewable energy (RE) sector seems to be losing steam, even as the total capacity has reached almost 86 GW by December 2019, says the latest State of India’s Environment Annual report, released here at the 2020 Annual Media Conclave and Anil Agarwal Dialogue.
India has set itself a target of 175 gigaWatt (GW) RE capacity by 2022 — mainly in the form of 100 GW solar (60 GW utility-scale and 40 GW rooftop) and 60 GW wind. Between 2014 and 2018, the RE sector grew from 2.6 GW to 28 GW — a cumulative aggregated growth rate of around 18 per cent.
But, says the report, “there has been a slowdown in capacity addition and auctions due to emerging risks and unaddressed structural issues.” Annual additions to solar capacity have dipped drastically to 6.5 GW in 2018-19, from 9.4 GW in 2017-18. In wind energy, against a sizeable 5.4 GW added in 2016-17, less than 2 GW was added annually in the following two years. The capacity auctioned to developers has remained almost constant at 2-3 GW. The share of RE in India’s power generation in 2018–19 was 10 per cent, a far cry from the national goal of 40 per cent share by 2030.
The stagnation, according to the report, is due to a combination of factors affecting every aspect from auctions and power purchase agreements (PPAs) to rising costs and payment delays. A 25 per cent safeguard duty on import of cells and modules has been imposed, causing commissioning delays and cost increases. Governments are also hankering for lowest possible tariffs which leads, among other things, to serial cancellation and postponement of bids. States are reneging on some existing PPAs in favour of lower tariffs from new projects. Project risks due to inadequate land and power evacuation infrastructure and poor financial health of discoms are worsening the situation.
The slowdown, naturally, raises doubts about India’s capability to meet the 175 GW target. To catch up, the country is now required to install 37.8 GW of solar rooftop, 32.1 GW of solar utility and 23.3 GW of wind power capacity in a short span of just two and half years.
CSE researchers say: “The government must restore the sanctity of auctions by removing arbitrary barriers like ceilings and by refraining from cancellations or postponement of bids. New mechanisms should be explored to manage discom risks. Simultaneously, the government should start working on the country’s longer-term energy decarbonisation vision.’’