Power generation through renewable sources saved the day for India with conventional capacity additions falling short during fiscal 2019.
A total of around 12 gigawatt (gw) of generating capacity was added across the country through various energy segments.
This addition was led by solar with 6.5 gw and another 1.6 gw by wind. Thermal capacity additions were 5.9 gw, however, about 2.2 gw of conventional power production was retired, leading to net capacity addition of 3.6 gw, as per the data with Central Electricity Authority.
As per Motilal Oswal Securities, capacity retirement happened at seven of the power plants which included Tamil Nadu's Kothagudem, Neyveli's NNTPP, GMR Group's Basin Bridge, NTPC's Badarpur (at National Capital Region), Assam's Lakwa and Punjab's GND Bhatinda as well as Ropar.
"Despite a slower thermal capacity addition, India's power segment remains reliant on thermal generation with a total capacity of 200.7 gw in March 2019 out of the total generating capacity of 278.5 gw," said the latest report on power sector by India Ratings and Research.
Going forward, there is a likelihood of fewer solar power capacity additions happening due to headwinds in the segment. On the thermal front, apart from commissioning units of the existing power plants, no new capacity additions are in the pipeline.
"Between 2019 and 2023, there is a possibility of up to 50 gw of solar capacity additions happening. Overall, the sentiment isn't positive as there have been some bid cancellations in the last few months and also due to lack of clarity of a certain policy," said an analyst.
In the last few months, there were frequent bid cancellations, lack of clarity on GST procedures and cost pressure from the imposition of the safeguard duty on imported cells and modules.
While there was no GST clarity on solar for over a year, with the final decision taken in December by the GST Council, it ended with an increase in taxation compared to what was expected by the industry. Similarly, the safeguard duty has turned out to be a double whammy of sorts, impacting costs of solar power projects and not resulting in any significant offtake for the domestic manufacturing sector. This was coupled by the cancellation of bids post auctions as state utilities as well as Solar Energy Corporation of India found tariffs to be higher than expectations. Close to 4.7 gw was cancelled in such a manner over March-December 2018, according to Crisil Research.
NO TO COAL
- On the thermal front, apart from commissioning units of the existing power plants, no new additions are in the pipeline
- Despite this, India's thermal generation capacity is 200.7 gw in March 2019 out of the total 278.5 gw
