India is estimated to have installed an additional 8-8.5 GW of green power capacity during FY 2018-2019, after installing 12 GW in FY 2017-2018; Of the latter amount, approximately 9 GW are for PV power, 2 GW are for wind power, and 1 GW are for other renewable-energy powers, according to the market information body ICRA.
According to an executive of ICRA, the phenomenal increase in India’s capacity underscores the cost competitiveness of green power, compared with conventional power.
Since June of 2018, the prices of PV power have already started to drop by 20%.
However, this year, the industry’s prospects are beginning to be impacted by the levy of protective tariffs on imported PV power components and the depreciation of the rupee against U.S. dollar. The latter development could increase the cost of PV power projects by 20-25% in the country.
In addition, the rising interest rates will increase the financial burden of developers, who are already faced with the challenge of connecting their facilities to the national grid, either directly or indirectly.
The situation has forced some developers to withdraw from the competition for the open bidding projects in the country and to scale down their projects.
Despite the adverse factors, the ICRA executive believes that green power is still quite cost-competitive compared to conventional power, and predicts that its share in India’s power mix will hit 12-13% by FY 2020, up from FY 2018’s 7.7%.