RE capacity requirement seen at 75GW by 2030 as industry goes green: Report

Mumbai, March 21 : Owing to the sustainability initiatives taken by the commercial and industrial players, the incremental capacity addition of renewable energy is estimated at around GW by 2030, ratings agency ICRA said. According to ICRA, the demand prospects for renewable energy capacity addition by the commercial and industrial (C&I) segment is expected to remain strong, given the improved tariff competitiveness and strong sustainability/green initiatives taken by them to meet their green energy requirements. The C&I segment accounts for about 40-45 per cent share in all India energy demand. “Even assuming 20 per cent of the energy requirements to be met by the C&I segment through RE, renewable energy capacity addition requirement is estimated to remain significant at about 75 GW by 2030,” the agency said. It further said the policy focus by the government in RE remains strong, given that India has pledged to net zero energy transition target by 2070. “From the C&I off-taker’s perspective, cost of sourcing of RE through open access remains at discount to grid tariffs after factoring the applicable open access charges. The grid tariffs have shown a rise and the energy charge in the same also varies widely between Rs 6-7 per t and Rs 6-10 per t for HT industrial and commercial segment respectively, across the states,” ICRA Senior Vice President & Co-Group Head – Corporate Ratings Girishkumar Kadam said. He further said that the regulatory risk remains a challenge for open access-based RE projects, due to dependency on open access and banking requirements. “The open access and banking charges/norms also vary widely with effective cost ranging between Rs 1.5-5 per t across key states, with an increasing trend seen due to upward pressure on cost of power supply and continued high level of cross-subsidization in the tariff structure for the discoms,” Kadam added. ICRA further said the credit profile of the majority of rated RE entities having third party / group captive PPAs, continues to remain supported by the availability of long-term PPAs with the creditworthy C&I customers, adequate liquidity buffer, support availability from the respective sponsor groups as well as strengths arising from operating track record. “The outlook for the RE sector remains stable, aided by the strong policy thrust, an improved tariff competitiveness of both solar & wind energy as well as a supportive regulatory framework,” it added. PSK RJ

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