India’s renewable energy sector seems to be losing steam: Report

New Delhi (NVI): India may find it difficult to meet its own target of 175 GW renewable energy capacity by 2022, even as its total capacity reached almost 86 GW by December 2019, according to a latest report of the think tank Centre for Science and Environment (CSE).

The State of India’s Environment report says that India’s renewable energy (RE) sector seems to be losing steam.

“India has set itself a target of 175 gigawatt (GW) renewable energy capacity by 2022 which is mainly in the form of 100 GW solar (60 GW utility-scale and 40 GW rooftop) and 60 GW wind,” it said.

“But there has been a slowdown in capacity addition and auctions due to emerging risks and unaddressed structural issues,” the report said.

Between 2014 and 2018, the renewable energy sector grew from 2.6 GW to 28 GW which is a cumulative aggregated growth rate of around 18 per cent, it said.

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 sizable 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 renewable energy 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.

This stagnation is due to a combination of factors affecting every aspect from auctions and power purchase agreements (PPAs) to rising costs and payment delays, the report says.

A 25 per cent safeguard duty on import of cells and modules has been imposed, causing commissioning delays and cost increases, it says.

Governments are also hankering for lowest possible tariffs which leads, among other things, to serial cancellation and postponement of bids, the report says.

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 its own target 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.

While, CSE researchers said that 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,” researchers added.