India’s RE Capacity to Reach 160 GW by 2025, Investment of Rs 4 Lakh Cr: ICRA

India’s RE Capacity to Reach 160 GW by 2025, Investment of Rs 4 Lakh Cr: ICRA

ICRA expects a gradual shift in RE technology bidding in India to shift towards hybrid projects, and that RE capacity will reach about 160 GW by March 2025

In its latest market analysis credit and rating agency, ICRA has said that it expects to witness a gradual shift in renewable energy (RE) technology bidding in India to shift towards hybrid projects. And that it expects the RE capacity to reach about 160 GW by March 2025, which will see an estimated investment of more than Rs 4 lakh crore.

In its analysis, it detailed why it expects the incremental bidding activity for RE projects to gradually shift over the medium term from standalone wind or solar bids to hybrid projects blended with other sources for round the clock (RTC) and peak supply. This is given the competitive tariffs discovered and the fact that hybrid projects enable efficient grid integration of renewables. Further, the bid out the pipeline for the awarded projects as on date remains strong at about 50 GW and this, in turn, is expected to result in a recovery in capacity addition to about 11-12 GW in FY2022.

Girishkumar Kadam, Sector Head & Vice President – Corporate ratings, ICRA, said, “the RE sector has witnessed aggregate project awards of ~78 GW under the tariff-based competitive bidding route across wind, solar and hybrid projects so far. Within this, the solar power segment has occupied a dominant share of 79 percent in the bid-out projects, while wind and hybrid share stood at 16 percent and 5 percent respectively. The COVID-19 pandemic induced lockdown restrictions slowed down the RE capacity addition to 2.2 GW in H1 FY2021 against more than 4 GW reported in H1 FY2020. Nonetheless, the execution is expected to improve in the second half of the FY2021. With the easing of supply chain challenges, the capacity addition for the full year of FY2021 is expected to be about 7.5 – 8.0 GW comprising 5.5-6.0 GW from solar and 1.5 to 2.0 GW from wind.”

Overall, ICRA expects the RE capacity to reach about 160 GW by March 2025 with a combination of standalone solar and wind projects and hybrid projects, with incremental capacity addition of 74 GW during April 2020 – March 2025, with an estimated investment of more than Rs. 4 lakh crore. However, the realisation of this potential is subject to resolution of execution challenges and timely signing of power purchase agreements (PPAs)/ power sale agreements (PSAs). This apart, a sustainable improvement in the financial position of state distribution utilities (Discoms) remains critical, given that counter-party credit risk is one of the prominent risks for RE IPPs.

It then goes on to detail that the improvement in the financial profile of the Discoms, as envisaged under UDAY could not be achieved due to the limited operational improvement and lack of adequate tariff revisions. This is, in turn, led to a large build-up of receivables for RE IPPs from Discoms, especially from the states of Andhra Pradesh, Tamil Nadu and Telangana. The Discom finances have been further constrained by the sharp decline in revenues during the lockdown period in H1 FY2021. 

In this context, the Government of India announced the liquidity support scheme of Rs 900 billion, now increased to Rs 1200 billion, in the form of loans from Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) to clear the dues to power generating companies, backed by state government guarantees and linked to the implementation of reforms in the state power sector. While the liquidity scheme is a short-term measure and is still in the process of being implemented, a sustainable improvement in Discoms’ finances can be achieved through an improvement in operating efficiencies and timely pass-through of cost variations through tariff revisions to consumers.

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Ayush Verma

Ayush is a staff writer at and writes on renewable energy with a special focus on solar and wind. Prior to this, as an engineering graduate trying to find his niche in the energy journalism segment, he worked as a correspondent for