India’s Utility Scale Renewable Growth To Face Hurdles In 2023 to 2024: IEA Report

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A latest report by the International Energy Agency (IEA) claimed that India is likely to see an increased installation of renewable energy in 2023 and 2024. It attributed this to some of the positive developments in the sector. The global report titled ‘Renewable Energy Market Update’ gives a projection of the growth of renewable energy across the world, including India.

However, the report said that utility-scale solar growth may face some growth issues due to supply chain hurdles. “India’s renewable capacity additions are expected to increase again in 2023 and 2024 owing to faster onshore wind, hydropower, and distributed solar PV deployment. However, annual additions for utility-scale projects, India’s largest renewable electricity growth segment, are expected to slow briefly this year due to supply chain challenges, preventing renewable energy growth from truly booming in the short term,” the report said.

The report blamed higher prices, lower auction volumes, and trade policies for the short-fall in PV deployment in 2022. It, however, said that India’s utility-scale solar PV capacity additions (made up mainly of capacity awarded in auctions) reached a record-breaking 14 GW, accounting for over two-thirds of renewable energy growth in the country during the period. “For 2023, however, lower auction volumes and supply chain challenges indicate that a slowdown of almost 20% is probable, with a possible recovery in 2024,” it said. 

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The report also said that India might become self-sufficient soon with increased solar PV manufacturing and policy support. “The two rounds of the PLI subsidy scheme should allow India to become fully self-sufficient in solar PV supply in the next four to five years. In the short term, however, demand for high-capacity modules from large-scale top-tier manufacturers exceeds supply,” the report said. 

The report also discussed the impact of the Approved list Of Module Manufacturers (ALMM) scheme extension on India’s growth in the solar sector. In addition, it also discussed the impact of higher Basic Customs Duty (BCD). The IEA report claimed that reduced project bankability, forced developers to cancel or delay projects while waiting for PV prices to fall. In response, the government postponed ALMM requirements for all projects commissioned by April 2024 and extended the commissioning deadlines. 

“Although government actions have mitigated some challenges, our forecast nevertheless expects that the temporary supply-demand mismatch for top-tier PV modules will prevent rapid utility-scale PV expansion in 2023 and 2024. However, the Indian market should experience a real deployment boom beyond 2025, with higher auction volumes and lower prices,” the report said. 

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The report said that solar PV additions will continue to increase in 2024 while challenges remain for wind expansion. “Declining module prices, greater uptake of distributed solar PV systems, and a policy push for large-scale deployment are driving higher annual solar additions in all major markets – including China, the European Union, the United States, and India,” it added. 

The report also dealt with the slow growth of the wind sector in India. It claimed that higher turbine prices in India were mainly due to supply chain issues which reduced the bankability of already auctioned projects and caused delays. 

Recognising the challenges that the wind sector in India faces, the government has been putting several policies in place. A policy for wind energy was introduced last year, aiming at the repowering of old and low-performing wind turbines to augment potential of wind projects. The central government is looking to issue tenders inviting bids for 8 GW of wind power projects every year until the end of this decade (2030). The directive said that there will also be a new bidding process in place, the key feature being the removal of reverse bidding, as demanded by many sections of the industry.