India Renewables Key View

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India Renewables Key View

• 12 May 2022
• India
• Renewables

Key View: We expect a rapid expansion of India's renewables sector over the coming years, specifically in the solar and wind power sector. The Indian government's continued support for the sector and increasing investor interest will ensure that the market's renewables power project pipeline will strengthen. Regardless, India will fall short of its ambitious capacity targets as a result of short-term challenges arising from an inefficient national grid, logistical and structural issues, and restrictions on solar equipment imports.

Headline Renewables Forecasts (India 2020-2026)

Indicator	2020	2021e	2022f	2023f	2024f	2025f	2026f
Generation, Non-Hydropower Renewables, TWh	160.402	184.511	208.935	232.329	255.313	280.284	304.685
Generation, Non-Hydropower Renewables, % y-o-y	4.8	15.0	13.2	11.2	9.9	9.8	8.7
Capacity, Non-Hydroelectric Renewables, MW	86,403.4	100,039.1	114,165.5	127,339.4	140,292.2	153,646.0	167,427.4
Capacity, Non-Hydroelectric Renewables, % y-o-y	4.3	15.8	14.1	11.5	10.2	9.5	9.0
e/f = Fitch Solutions estimate/forecast. Source: EIA, national sources, Fitch Solutions

Key Forecasts And Latest Updates

• India's non-hydropower renewables sector will experience strong expansion in the coming years. The sector's power generation will grow by 315TWh, at an annual average of 9.3% from the end of 2021 to 2031. This increase will result in its share of the generation mix expanding from 13% by the end of 2021 to 17% in 2031.
• Facilitating the growth of the sector’s generation, non-hydropower renewables capacity will increase by an annual average of 9.3% from 2022 to 2031, totalling 243GW by 2031. This will correspond to 36% of India’s power capacity mix in 2031.
• Though this growth is robust, it still falls below the government's target of 175GW by 2022, as we highlight risks from grid bottlenecks and lack of power purchase agreements.
• On April 1 2022, India imposed basic customs duties on imported solar modules and solar cells at 40% and 25% respectively. This is a move by the government to encourage developers to wane their dependence on solar equipment made overseas and start sourcing them domestically. While this bodes well for domestic solar equipment manufacturers, we highlight that there is still an evident mismatch between domestic capacity and demand required by developers. This will restrict the growth of the solar power sector.

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