Research firm ICRA has estimated addition of 8.8 GW power generation capacity from clean sources during the fiscal compared with 6.9 GW in 2015-16 due to higher capacity addition in solar segment.
"Overall, ICRA estimates capacity addition in renewable energy sector to increase to 8.8 GW in FY17 as against 6.9 GW seen during FY2016, primarily led by the higher capacity addition in the solar segment. Further, solar power is expected to remain a key driver for renewables capacity addition in the medium term," said ICRA Ratings Senior Vice President Sabyasachi Majumdar in a statement here.
According to the statement, in spite of aforementioned favourable factors, transmission challenges and counterparty credit risks affecting signing of PPAs and timely payments could pose challenges for the sector.
Further with concerns on the viability of competitively bid tariffs in the solar energy sector, actual solar capacity addition would hinge on timeliness in achieving the financial closure by IPPs, as well as in signing of PPAs with the buyers, viz. State-owned utilities, it said.
Based on the tenders floated and proposed for award of solar projects under various state and central government policies so far, ICRA estimated the solar capacity addition to significantly increase to about 5.7 GW in FY2017 as against the 3 GW seen in FY2016.
However, in the wind energy segment, ICRA notes that there could be a decline in fresh capacity addition from 3.3 GW seen in FY2016 to around 2.5 GW in FY2017 because of several factors.
These factors include, substantial reduction in preferential tariff (from Rs 5.92 per unit to Rs 4.78 per unit) for new wind energy projects to be commissioned in MP and slowdown in signing of fresh PPAs & delays in payments by state owned utility in the state of Maharashtra.
The renewable energy sector has witnessed a record capacity addition of 6.9 GW during FY2016, which was driven by sizeable capacity addition in both the wind and solar energy segments, which stood at 3.3 GW and 3 GW respectively.
As a result, the share of installed renewable energy based capacity increased to 14.1 per cent of the overall installed capacity in the country as on March 31, 2016 from the level of 13.2 per cent as on March 31, 2015.
"The increasing share of RE capacity in the overall installed capacity can be attributed to increasing cost competitiveness of generation from RE sources, shorter execution cycle for wind and solar power projects as compared to conventional power projects and policy support from central and state governments to RE sector," said Majumdar.
