ICRA Predicts Surge to 170 GW in Indian Renewable Energy Capacity by March 2025, Fueled by Policy Support and Solar Module Price Decline

In a recent report, ICRA, a renowned credit rating agency, anticipates a substantial surge in India’s renewable energy (RE) capacity, projecting it to reach approximately 170 GW by March 2025, up from the existing 132 GW as of October 2023. This optimistic outlook is bolstered by a surge in tendering activities, with over 16 GW projects already bid out and an additional 17 GW underway, aligning with the Indian government’s ambitious annual bidding trajectory of 50 GW, announced in March 2023.

Mr. Vikram V, Vice President & Sector Head – Corporate Ratings at ICRA, highlighted key factors propelling this growth. The sharp decline in solar PV cell and module prices, a moratorium on the ALMM order until March 2024, and timeline extensions for solar and hybrid projects are expected to drive RE capacity addition to 20 GW in FY2024 and 25 GW in FY2025, predominantly fueled by solar power.

However, challenges persist, particularly in execution due to delays in land acquisition and transmission connectivity. Despite these hurdles, the substantial decrease in solar PV cell and module prices by 65% and 50%, respectively, over the past year is positively impacting debt coverage metrics for upcoming solar projects.

The report also emphasizes the need for addressing challenges related to land acquisition and transmission connectivity to ensure smooth capacity addition. Additionally, it underscores the potential risks associated with fluctuations in imported solar PV cell and wafer prices until fully integrated module manufacturing units are established in India.

The rise in RE capacity is expected to elevate the share of RE plus large hydro in India’s electricity generation from 23% in FY2023 to around 40% in FY2030. The report also discusses the significance of Renewable Energy with Real-Time Connectivity (RE-RTC) projects, highlighting their competitiveness against conventional sources and the increasing role of wind and solar power projects supplemented by energy storage systems. Furthermore, it notes the improved discipline of state distribution utilities in making timely payments to power generators, signaling positive trends following the implementation of late payment surcharge rules in June 2022. The sustainability of this trend, however, hinges on the financial health of these utilities, intertwined with the implementation of necessary reform measures by the states.