Bridge To India lowers renewable outlook for 2020-24

Clean energy consultancy Bridge To India has lowered India’s renewable capacity addition outlook for the five-year period 2020-24 as considerable economic uncertainty looms with Covid infections rising rapidly in the country.

India is expected to add 35 GW of solar and 12 GW of wind power capacity over 2020-24, according to a BTI report. This base-case capacity addition is significantly lower than the consultancy’s previous estimate of 43 GW and 15 GW, respectively.

“With number of infections in India still rising rapidly, considerable uncertainty remains over economic outlook. The energy sector has been hit by multiple demand and supply shocks. Short-term impact on the renewable power sector has been relatively mild following a series of ad hoc relief measures announced by the government. But outlook over the next few years appears gloomier due to weakening power demand growth, deteriorating financial condition of DISCOMs and further constraints in debt financing”—the report stated.

With most business activity coming to a virtual stand-still, there has been a precipitous drop of up to 30% in power demand.

The report states if demand weakness persists, the Discoms may be reluctant to sign new power purchase agreements (PPAs).

“Recently completed auctions where execution of PPAs and/or regulatory tariff approvals are still pending (4,000 MW manufacturing-linked tender, 1,200 MW peak power tender and 400 MW round-the-clock power tender, amongst others) are all at risk”—as per the report.

Depressed market prices and demand uncertainty may also weaken the case for rooftop solar and open access renewables, prompting about 15-20% fall to 1,200 MW and 600 MW, respectively, in 2020.