The country’s annual renewable energy (RE) installations are expected to surpass 35 gigawatt (GW) over the next two years, primarily supported by a healthy pipeline of more than 100 GW projects, CareEdge Ratings said on Wednesday.

“The accelerated growth in the RE over the last 12 months has been an outcome of growing ESG focus of corporates, buoyant investor interest, proactive policy support, and enhanced availability of financing avenues,” the ratings agency said.

Overall, the country has installed 18.5 GW of RE capacity in FY24, 21 per cent higher than the capacity added in the previous fiscal.

“Amid the rising demand, CareEdge Ratings believes that the solar equipment sector will witness a capex of close to ₹1 lakh crore, with an estimated debt funding of nearly ₹70,000 crore over the next three to five years,” it said.

“The upcoming capacity of 50 GW for cells and 80 GW for modules necessitates a capex of ₹32,000 crore and ₹12,000 crore, respectively, coupled with the cumulative capex of ₹55,000 crore, envisioned for 40 GW of wafer and nearly 25 GW of polysilicon capacities awarded under PLI,” it added.

The solar power segment remained the key driver of capacity addition in the RE sector, with significant capacity additions over the past 7-8 years, which increased its share in the RE capacity mix to 59 per cent as of September 2024, from 15 per cent as of March 2016.

India boasts of nearly 70 GW of module capacity and nearly 8 GW of cell capacity as of March 2024, as against the annual average solar capacity additions of nearly 21 GW on Direct Current (DC) basis witnessed over the last two years.

As per CareEdge Ratings, the growth in solar capacity in the medium term will be driven by an annual tendering target of 50 GW RE capacity through renewable energy implementing agencies, majority of which are expected from solar.

Sizeable capacity additions of about 20 GW will be contributed through rooftop solar, hybrid solar component, and off-grid solar over the next 2-3 years.

That apart, solar open access capacities of 4-5 GW are likely to be added over the 2-3 years, aided by ESG commitments of corporates and improving economic viability of Commercial and industrial (C&I) projects.

Emphasising the critical role of strong policy support in fostering the growth of solar equipment manufacturing in India, CareEdge Ratings Director Jatin Arya said the Indian solar market is poised for transformative growth.

“With robust policy frameworks and a clear focus on sustainability, we are witnessing a significant shift towards renewable energy that will not only meet domestic needs but also position India as a global player in solar equipment manufacturing,” he added.

However, the ratings agency cautioned that lack of integrated solar equipment capacity, supply chain, dependence on China increasing competitive intensity, and delay in RE capacity additions due to systemic issues are some headwinds that remain monitorable over the medium term.

Related Topics