New Delhi, Sep 25: Renewable energy (RE) capacity commissioning momentum in India remains strong with a robust 27 GW of gross capacity added during the first five months (April-August) of the current financial year, according to a report released on Thursday.
Within this, 20GW of renewable capacity was commissioned through August. Another 142GW is under various stages of construction, as per Central Electricity Authority (CEA), according to an HSBC report.
With gradual progress on commissioning of interstate transmission lines, the commissioning of renewable projects is expected to pick up pace as well. Recent mergers and acquisitions and renewable developers' potential listings also should make more capital available to accelerate commissioning, the report states.
“Innovative tenders continue to bring down power storage costs, which we expect will increase acceptability of renewable power,” the report observed.
It highlights that the solar plus energy storage system (ESS) costs have now fallen to record lows. In a recently discovered solar plus storage tender, the tariffs discovered were as low as IRs 2.7-2.76/kWh. Based on the terms, the developer is expected to provide power for two hours during peak times and storage for another two hours during morning peak, apart from supplying the usual solar power during solar hours.
While the tariffs have raised concern on the profitability, the savings on infrastructure, low risk on land acquisition, and earnings for free power during morning peak will likely allow developers to earn normative returns, the report states.
It also expects slower tendering and focus on cleaning the old renewable auctions to ultimately restore investor confidence in the renewable energy sector. India conducted more than 90GW of renewable energy auctions in the past two years and a significant part remains unsigned into power purchase agreements (PPA). This creates uncertainty for developers and investors on the value that needs to be assigned to these award letters (LOAs), the report points out.
India has already cancelled 11.4GW of renewable tenders that met with insufficient participation or high tariffs. This could pave the way for allow some old suck tenders to be cancelled as well, it added.
The report expects the overall demand for power in the country to accelerate next month. It states that overall power demand is still tepid, although there has been a 3 per cent year-on-year increase in September.
“It’s important to highlight that power demand this month already exceeds September 2023's (a month when power demand grew 11.5 per cent year-on-year). Based on weather forecasts, likelihood of an intense winter, and expected pickup in industrial activity, is expected to lead to a meaningful pickup in power demand in late October or early November,” according to the report.
This report is from IANS news service. NewsGram holds no responsibility for its content. (NS)
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