India’s Renewable Capacity Additions to Fall in Next 5 Years: BTI

India’s renewable capacity additions in the next five years is expected to fall down from previous estimates due to COVID-19 disruptions, according to BTI

India’s total solar and wind (renewable) power capacity additions in the next five years is expected to reach only 35 gigawatt (GW) and 12 GW, respectively, down from previous estimates due to COVID-19 disruptions, according to a recent report. The earlier base case solar and wind power capacity addition estimates over 2020-2024 were 43 GW and 15 GW, respectively, said the report by clean energy consultancy Bridge to India (BTI).

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“With the number of infections in India still rising rapidly, considerable uncertainty remains over the economic outlook. The energy sector has been hit by multiple demand and supply shocks. Short-term impact on the renewable power sector has been relatively mild following a series of ad hoc relief measures announced by the government,” said the report titled ‘COVID-19: Impact on Indian renewables’.

It added that the outlook over the next few years appears gloomier due to weakening power demand growth, deteriorating financial condition of Discoms, and further constraints in debt financing.

Regarding the short-term impact of the pandemic on the sector, the report said that there would be a loss of 2-3 GW capacity addition in 2020 along with higher working capital and operational costs for developers and contractors.

Further, for the medium-term impact, the report detailed that there would be lower capacity addition due to sustained weakness in power demand, higher Discoms offtake risk, reduced appetite of lenders, and greater policy uncertainty risks for rooftop solar. However, it would lead to a push for local manufacturing as well.

Accelerated transition to clean energy and easier availability of equity capital is expected for the long term.

Last month, it was reported that India had added about 715 megawatts (MW) of utility-scale solar capacity in January-March 2020, down 67 percent from 2163 MW during the same period last year. And only added 28 MW of utility-scale wind capacity in the quarter ended March, which was down 65 percent as compared to 944 MW in January-March 2019, according to the BTI quarterly analysis report.

“India added total utility-scale solar and wind capacity of 715 MW and 328 MW, respectively in the quarter ended March. For the financial year 2019-20, total utility-scale capacity addition was 7,408 MW, 34 percent below the high of two years ago,” the report revealed. It further said the progress in the second and third quarters would continue to be affected by coronavirus disruptions.

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