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Renewable capacity addition likely to be subdued at 8 GW in FY21: ICRA

30 Jul 2020 Evaluate

The ratings agency ICRA in its latest report has said that the capacity addition in the renewable energy (RE) sector is expected to remain subdued at 8 GW in the current financial year (FY21) given the continued execution challenges amid COVID-19 pandemic, because of disruption of supply chain as well as labour availability issues. It said India's renewable capacity is expected to reach 125 GW of by December 2022, nearly 28 percent lower than the government's target of 175 GW by the period.

According to the report, this has added to the woes of the sector which is plagued by issues such as delays in land acquisition and receipt of evacuation approvals, regulatory delays in tariff adoption and obtaining financial closure in a tight financing environment. That said, the overall medium to long term investment outlook for the renewable energy sector remains strong supported by highly competitive tariffs, policy support and new schemes such as peak supply, round-the clock supply and renewable energy plus thermal blending, which mitigates the risk of intermittent RE supply to some extent.

The report further said renewable power producers have been facing significant delays in receiving payments, especially from discoms in the states of Andhra Pradesh, Rajasthan, Tamil Nadu and Telangana. It also said finances of discoms have been further constrained by the adverse impact of the lockdown imposed to control the coronavirus pandemic.

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