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

Of this, 20 GW of renewable capacity was commissioned up to August. Additionally, 142 GW is at various stages of construction, as noted by the Central Electricity Authority (CEA) and highlighted in an HSBC report.

With steady advancements in the commissioning of interstate transmission lines, the pace of renewable project commissioning is anticipated to accelerate. Recent mergers, acquisitions, and potential listings of renewable developers are expected to increase capital availability, thereby expediting the commissioning process, according to the report.

“Innovative tenders are helping to reduce power storage costs, which we believe will enhance the acceptance of renewable energy,” the report remarked.

It points out that costs associated with solar plus energy storage systems (ESS) have now reached unprecedented lows. In a recent solar plus storage tender, tariffs were as low as IRs 2.7-2.76/kWh. Under these terms, the developer is expected to supply power for two hours during peak demand and provide storage for an additional two hours during morning peaks, in addition to delivering standard solar power during daylight hours.

While concerns regarding profitability due to these tariffs exist, savings on infrastructure, low land acquisition risks, and earnings from free power during morning peaks are expected to enable developers to achieve normative returns, the report suggests.

It also anticipates a slowdown in tendering and a focus on clearing old renewable auctions to ultimately restore investor confidence in the renewable energy sector. Over the past two years, India has conducted more than 90 GW of renewable energy auctions, with a significant portion remaining unsigned in power purchase agreements (PPAs). This creates uncertainty for developers and investors regarding the value of award letters (LOAs), as per the report.

India has already canceled 11.4 GW of renewable tenders due to insufficient participation or elevated tariffs. This may also lead to the cancellation of some older tenders, the report adds.

The report predicts that the overall demand for electricity in the country will increase next month. It notes that while overall power demand remains subdued, there has been a 3 percent year-on-year increase in September.

“It’s crucial to note that power demand this month surpasses September 2023's levels, a month that saw a remarkable 11.5 percent year-on-year growth in power demand. Based on weather predictions, the likelihood of a harsh winter, and an expected rise in industrial activity, a significant increase in power demand is expected by late October or early November,” the report concludes.