According to ICRA, India will add 16 GW of renewable energy capacity in FY23.

According to PTI, India is expected to add an estimated 16 GW of renewable energy over FY23, according to rating agency ICRA. The country also has a strong pipeline of 55 GW clean energy projects.

The outlook for capacity addition "remains strong," according to ICRA, due to a large project pipeline and "highly competitive tariffs offered by these projects." It expects 16 GW capacity addition in FY23, up from 12.5 GW in FY22 and 7.4 GW in FY21.

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India targets 16GW of renewable energy capacity in FY23

It believes that recent COP26 summit commitments, such as increasing non-fossil fuel power capacity to 500 GW and meeting 50% of energy requirements through renewables by 2030, improve prospects for the renewable energy sector.

It also stated that capacity addition made a "strong recovery" between April and November 2021 (FY22), adding 8.2 GW compared to 3.4 GW in the previous year during the same period.

Girishkumar Kadam, Senior Vice President & Co-Group Head – Corporate Ratings at ICRA, predicts that the backlog of projects awarded by central nodal agencies and state distribution utilities will also drive capacity addition. "(There is) still a large amount of undeveloped solar, wind, and hybrid capacity of more than 55 GW." Based on this, ICRA anticipates an increase in RE capacity addition from 7.4 GW reported in FY2021 to 12.5 GW in FY2022 and 16 GW in FY2023," Kadam said.

To back this up, Kadam stated that the Solar Energy Corporation of India (SECI) has made progress in signing power purchase agreements (PPAs) over the last six months, followed by wind and hybrid.

Near-term challenges include execution headwinds as well as supply chain issues for procuring modules and wind turbine generators.

ICRA also noted that the average price of imported solar PV modules (Mono PERC) has risen by more than 35% in the last year, putting upward pressure on capital costs for solar power projects. Aside from that, the Goods and Services Tax (GST) rate for solar power equipment was raised.

According to Vikram V, Vice President & Sector Head - Corporate Ratings at ICRA, the availability of adequate funding avenues at cost competitive rates is critical in order to meet these capacity targets.

Meanwhile, according to a Bridge to India report, India will add 10 GW of renewable capacity this year (2022). According to The Economic Times, this is a 10% decrease year on year (YoY).

It went on to say that capacity addition prospects would "rely heavily on the timeline for clarity on transmission lines in Rajasthan and Gujarat," and that many projects had already received relief due to module supply disruptions.

If the basic customs duty (BCD) is imposed as expected beginning in April 2022, it expects rooftop and open access solar projects to take a "immediate hit." The final decision on BCD is expected to be made in the Union Budget 2022.

On the plus side, it stated that budget clarity on BCD and the expansion of the production-linked incentive (PLI) scheme to include bidders would boost domestic manufacturing.