The missed execution for FY 2021 due to the pandemic is pegged at 4 GW, ICRA said.
Giving the sector a negative outlook, ICRA’s power and renewables head Girishkumar Kadam said that the rating was based on execution delays for projects that have been bid over the past two years, along with concerns about the delays in payment by the state distribution companies.
An investment of Rs. 2 lakh crore over the next two years is expected in the renewable energy space, with an estimated capacity of 30 to 35 GW to be added. Nearly 8 GW of this will be added in FY 2021, Kadam said.
By December 2022, ICRA predicts that the total renewable energy capacity will not exceed 125 GW. Although the utility-scale solar grid capacity of 60 GW is expected to be close to being fulfilled, the rooftop solar and wind targets are lagging behind, the company said. “Though lower than the government’s target of 175 GW, the incremental capacity addition is healthy at 33-38 GW,” Kadam said.
Per industry sources, India’s current renewable energy capacity is 87 GW, which makes up 23% of all installed power capacity in India
Due to lockdown restrictions, projects under construction are likely to face delays that last between four to six months, the rating agency said. However, the Ministry of New and Renewable Energy (MNRE) has only outlined a blanket 68-day period, plus an additional 30-day extension for government projects. However, developers have written to the ministry to request for at least a six-month extension period.
State distribution companies (discoms) remain another point of concern for the sector. ICRA predicts the revenue gap for discoms to increase by as much as Rs. 45, 000 crore in FY 2021, due to a significant drop from commercial and industrial consumers during the lockdown. “If the revenue gap estimate is not considered as a regulatory asset, the losses will increase sharply,” Kadam added.