ICRA expects India to add 17 GW of new PV capacity this year

From pv magazine India

ICRA has maintained a stable outlook for the renewable energy sector, led by strong policy support, healthy demand prospects, and tariff competitiveness. It said the realization of past dues and regular payments of ongoing bills by distribution companies following the launch of the late payment surcharge (LPS) scheme are also positives for the sector.

ICRA expects India to add 18 GW to 20 GW of renewable energy capacity in fiscal 2024 and about 25 GW in fiscal 2025, compared to 15 GW in fiscal 2023. Much of this capacity addition will be from solar projects. New solar capacity additions in fiscal 2024 and fiscal 2025 are expected to reach 17 GW and 20 GW, respectively.

“The sharp decline in solar PV cell and module prices, abeyance of the order on Approved List of Models and Module Manufacturers (ALMM) till March 2024, and the timeline extension approved for solar and hybrid projects, are expected to lead to an improvement in renewable energy capacity addition to 18 GW to 20 GW in fiscal 2024 from 15 GW in fiscal 2023,” said Girishkumar Kadam, senior vice president and group head – corporate ratings for ICRA.

However, Kadam said that challenges remain on the execution front concerning delays in land acquisition and transmission connectivity. He said this could hamper prospects for capacity additions.

ICRA said the all-India thermal plant load factor (PLF) will continue to improve to 69.0% in fiscal 2025, from about 68% projected for fiscal 2024, led by growth in electricity demand and limited thermal capacity additions.

ICRA’s outlook for the thermal power segment is “stable,” supported by a healthy improvement in the thermal PLF, along with the reduction in dues from state distribution utilities following the implementation of the LPS scheme in August 2022.

The ratings agency said it expects demand growth to moderate to 5.5-6.0% in fiscal 2025 from the 7.0% to 7.5% projected for fiscal 2024.

“The current under-construction thermal capacity is about 30 GW, which is predominantly in the central and the state-owned generation segment and is expected to be commissioned over the next two to four-year period. In our view, there is a clear need for incremental capacity beyond this pipeline if the annual electricity demand growth continues to exceed 6.0% till 2030, after factoring in the renewable capacity addition,” Kadam said. “If annual demand growth is stronger at 7.5% till 2030, to meet the same, the incremental thermal capacity requirement will need to be as large as 70 GW.”

Coal has remained a dominant fuel source to meet India’s baseload power demand, and its share in the overall energy generation mix is expected to fall from 73% in fiscal 2023 to about 58% to 60% in fiscal 2030, assuming 200 GW of renewable capacity addition between fiscal 2024 and fiscal 2030, according to ICRA estimates. Nonetheless, it noted that the share of coal in the generation mix is expected to remain significant until 2030.

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