New Delhi, Sep 25 (NationPress) The momentum for the commissioning of renewable energy (RE) capacity in India continues to be robust, with a remarkable 27 GW of gross capacity added during the initial five months (April-August) of the ongoing financial year, according to a report released on Thursday.

Out of this, 20 GW of renewable capacity was commissioned by the end of August. Additionally, 142 GW is currently under various stages of construction, as reported by the Central Electricity Authority (CEA) and cited in an HSBC report.

With gradual advancements in the commissioning of interstate transmission lines, the pace of renewable project commissioning is anticipated to accelerate further. Recent mergers and acquisitions, along with renewable developers' potential listings, are expected to enhance capital availability to speed up commissioning, the report notes.

“Innovative tenders are persistently driving down power storage costs, which we predict will boost the acceptability of renewable energy,” the report indicated.

The report emphasizes that the costs associated with solar plus energy storage systems (ESS) have dropped to unprecedented lows. In a recently conducted solar plus storage tender, the tariffs discovered ranged as low as IRs 2.7-2.76/kWh. Under the terms, the developer is expected to deliver power for two hours during peak times and provide storage for an additional two hours during morning peak, in addition to supplying the usual solar energy during sunlight hours.

While there are concerns regarding profitability due to these tariffs, the savings on infrastructure, low land acquisition risks, and the opportunity for free power during morning peak hours are likely to enable developers to achieve normative returns, the report suggests.

It also predicts a slowdown in tendering and a focus on resolving old renewable auctions to ultimately restore investor confidence in the renewable energy sector. India has conducted over 90 GW of renewable energy auctions in the last two years, with a significant portion remaining unsigned in power purchase agreements (PPAs). This creates uncertainty for developers and investors regarding the valuation of these award letters (LOAs), the report highlights.

India has already canceled 11.4 GW of renewable tenders due to insufficient participation or high tariffs. This could potentially lead to the cancellation of more old tenders as well, it noted.

The report anticipates an increase in overall power demand in the country next month. It mentions that overall power demand remains tepid, although there has been a 3 percent year-on-year increase in September.

“It’s essential to note that power demand this month has already surpassed September 2023's levels (a month when power demand surged 11.5 percent year-on-year). Based on weather forecasts indicating an intense winter and an expected rise in industrial activity, a significant increase in power demand is likely in late October or early November,” according to the report.