New capacity addition of non-hydro renewable energy increased to 15.5 GW during FY22, compared to just 7.7 GW installed in the preceding fiscal year, according to the latest edition of the CEEW Centre for Energy Finance (CEEW-CEF) Market Handbook released.
However, at the end of FY22, India's renewable energy generation capacity (including hydro) stood at 150 GW. "This is far off from its target to install 500 GW of non-fossil fuel capacity by 2030 and will require an annual deployment of approximately 40 GW/year to achieve the 2030 target," the handbook said.
Net coal-based capacity added during the year dropped by around 33 per cent compared to the year before. Also, during FY22, peak power demand soared to unprecedented levels, falling short of 1.4 GW in March 2022, compared to just 0.5 GW in the year-ago period, it pointed out.
"Over 100 per cent rise in RE capacity addition this fiscal versus capacity addition in FY21 is heartening. However, the recent stress seen in the power sector, with several states facing the prospect of power cuts, underscores the central role that thermal power continues to play in India's energy mix," said Gagan Sidhu, Director, CEEW-CEF referring to the unprecedented heat wave in March and April which led to the power demand shooting up, in turn, leading to a shortage in coal supplies.
Further increase in RE can provide a significant degree of protection from the kind of supply chain issues plaguing thermal power, but for that battery storage needs to be deployed at scale to address RE's one big drawback - intermittency. Other innovative procurement formats such as hybrid and round-the-clock (RTC) also offer a certain degree of protection against intermittency.
"Interestingly, of the 17.5 GW of RE capacity auctioned in FY22, 4.3 GW representing a 25 per cent share was under such innovative procurement formats. We can expect this share to increase further as it appears that discoms are increasingly looking to developers to address RE's intermittency challenge," he said.
Overall, in terms of net capacity additions, renewable energy formed a little more than 89 per cent of the total 17.3 GW capacities added in the power sector during FY22. The share of RE in net capacity additions stood at little more than 63 per cent in FY21.
Further, solar energy comprised 90 per cent of the total RE capacity added during the year, driven partly by a 21 per cent rise in installations of rooftop solar to 2.3 GW. An increase in the cost of raw materials and supply chain constraints resulted in rising solar PV module costs. Higher module costs and the imminent imposition of basic customs duty led to a rise in the lowest solar tariff discovered to Rs 2.14 per kWh in FY22 from Rs 1.99 per kWh in FY21.