India slows down in hitting 175GW renewables target

Less than 2GW of wind power was added annually in the last two years.

India’s rally towards its 175GW renewable energy target is slowing down. According to a report by the Centre for Science and Environment (CSE), annual additions to solar capacity have dipped drastically to 6.5GW in 2018-2019, from 9.4GW in 2017-18, whilst less than 2GW of wind power was added annually two years after 5.4GW was added in 2016-17.

India has set itself a target of 175GW renewable energy capacity by 2022 mainly in the form of 100GW solar (60GW utility-scale and 40GW rooftop) and 60GW wind. Between 2014 and 2018, utility-scale solar sector grew from 2.6 GW to 28 GW -- and the sector experienced a cumulative aggregated growth rate of around 18%.

But there has been a slowdown in capacity addition and auctions due to emerging risks and unaddressed structural issues, said CSE. “The share of renewable energy in India’s power generation in 2018–19 was 10%, a far cry from the national goal of 40% share by 2030.”

The stagnation, according to the report, is due to a combination of factors affecting every aspect from auctions and power purchase agreements (PPAs) to rising costs and payment delays. “A 25% safeguard duty on import of cells and modules has been imposed, causing commissioning delays and cost increases.”

“Governments are also hankering for lowest possible tariffs which leads, amongst other things, to serial cancellation and postponement of bids,” CSE said. States are reneging on some existing PPAs in favour of lower tariffs from new projects, whilst project risks due to inadequate land and power evacuation infrastructure and poor financial health of discoms are worsening the situation.

According to CSE, the country is now required to install 37.8GW of solar rooftop, 32.1GW of solar utility and 23.3GW of wind power capacity in a short span of just two and half years to successfully hit its targets.

CSE researchers said, “The government must restore the sanctity of auctions by removing arbitrary barriers like ceilings and by refraining from cancellations or postponement of bids. New mechanisms should be explored to manage discom risks. Simultaneously, the government should start working on the country’s longer-term energy decarbonisation vision.’’