Annual renewable energy Installations Expected to Surpass 35 GW per Year by FY27: CareEdge Ratings
Expects solar equipment sector to witness a CapEx of close to rupees one lakh crore, with an estimated debt funding of nearly rupees 70,000 crore over the next three to five years
According to CareEdge Ratings, the annual renewable energy (RE) installations is likely to surpass 35 gigawatt over the next two years, primarily supported by a healthy pipeline of more than 100 gigawatt.
CareEdge Ratings says that the accelerated growth in the RE over 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. Overall, India has installed 18.5 gigawatts of RE capacity in FY24, which is 21% higher than the capacity added in the previous fiscal.
Amid the rising demand, CareEdge Ratings believes that solar equipment sector will witness a CapEx of close to rupees one lakh crore, with an estimated debt funding of nearly rupees 70,000 crore over the next three to five years. It says that the upcoming capacity of 50 gigawatts for cells and 80 gigawatt for modules necessitates a CapEx of rupees 32,000 crore and rupees 12,000 crore, respectively, coupled with the cumulative capex of rupees 55,000 crore, envisioned for 40 gigawatt of wafer and nearly 25 gigawatt of polysilicon capacities awarded under PLI.
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% as of September 2024, from 15% as of March 2016. India boasts of nearly 70 gigawatt of module capacity and nearly 8 gigawatt of cell capacity as of March 2024, as against the annual average solar capacity additions of nearly 21 gigawatt 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 annual tendering target of 50 gigawatt RE capacity through renewable energy implementing agencies, majority of which are expected from solar. Sizeable capacity additions of about 20 gigawatt will be contributed through rooftop solar, hybrid solar component, and off-grid solar over the next 2-3 years. This apart, solar open access capacities of 4-5 gigawatt 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.
Jatin Arya, Director at CareEdge Ratings, who emphasized the critical role of strong policy support in fostering the growth of solar equipment manufacturing in India 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.”
Mayuresh Karavade, Assistant Director at CareEdge Ratings, said, “The surge in renewable energy capacity is not merely an aspiration; it is essential for India’s energy security and environmental goals. With a strong pipeline of projects and increasing investments in domestic manufacturing capabilities, we are on track to achieve our ambitious targets.”
Though, CareEdge Ratings cautions that the 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.
