Renewable energy sector in India to fall short of capacity targets for 2022

06 June 2018 3 min. read
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According to a new report from renewable energy consultancy Bridge to India, the wind and solar energy sectors in India are unlikely to meet the capacity targets set for them by the government by 2022. Solar power is expected to meet just short of 70% of its target and wind energy will fall just short of 90%.

In line with the global effort to transition to clean energy – particularly since the Paris Agreement – the Indian government has set highly ambitious targets for its renewable energy sector in recent years. With respect to solar energy, in particular, the country has made significant progress, having achieved its initial target (20 gigawatts) for 2022 by as early as March this year.

As a result, the government re-established its goals for March 2022, setting its solar power target at a highly ambitious 100 GW, combined with a wind energy target of 60 GW and a biomass and small hydro target of 15 GW.

Efforts towards achieving the goal have been supported by the business environment in India, which includes major corporations such as Hero Future Energies, Aditya Birla Group, Sembcorp, Trina Solar, Scheider Electric and a number of others. Advisory firms such as Accenture, Deloitte, and BCG also ramped up their energy expertise after the new targets were set, hoping to capitalise on the anticipated demand for project support.

Total expected capacity addition by March 2022

However, according to a new report from consulting firm Bridge to India, the new targets are perhaps a bit too ambitious, in light of India’s budget and infrastructure constraints. Established in 2008, Bridge to India is a strategy advisory firm, with the specific objective of helping incorporate the international best practices in clean energy into business operations.

As per the firm’s analysis – which is based off responses from a roughly equal mix of Indian and international executives – India is likely to fall just short of the targets for both the wind and the solar energy segments. In terms of solar energy, most executives expect India to achieve a total capacity of 66 GW by March 2022, which is 66% of its 100 GW target.

One factor that is anticipated to act as a barrier to the development of the overall solar power capacity is the poor performance of the rooftop solar power generation segment. Rooftop solar plants often require large and costly storage units, which are difficult to install due to a lack of knowhow alongside other regulatory barriers.

Renewable energy industry outlook India

As a result, rooftop units are expected to add only 10 GW in capacity by 2022, significantly short of the 40 GW that is expected of the segment and representing a 25% achievement of the target. In terms of wind energy capacity, most executives expect an addition of 52 GW, which represents and 87% achievement of the 60 GW target for 2022.

Nevertheless, given the fact that the targets have been revised upwards, and that the government is demonstrating intent to develop the renewable energy sector, most executives in the sector are positive about its outlook. Of the executives surveyed, 52% said that they were optimistic, 15% said they were very optimistic, and 3% stated that they were extremely optimistic.

Commenting on the findings, Vinay Rustagi, Managing Director at Bridge to India said, “While there are challenges, the government seems to be committed to the sector and moving rapidly to find solutions. The tender pipeline has been very active and the M&A activity has also been robust. That is why people feel that there is business growth and there is an opportunity for them to create value.“