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    India Renewables Key View


    May 13, 2022 - Fitch Solutions Sector Intelligence

     

      THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

      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.
      This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.

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