Renewable Energy Market in India 2022-2027

Renewable Energy Market in India 2022-2027

The demand for power around the world is steadily increasing with enhanced living standards, supported by rapid urbanization. There has been a spurt in the demand for renewable energy since conventional electricity generation methods such as thermal power plants are getting exhausted gradually. The renewable energy market is constantly expanding through efficient collaboration between the government and the private sector. In India, solar and wind are the most popular renewable sources of energy.

Market insights:

The cumulative installed renewable energy capacity (excluding large hydro) stood at 111.39 GW in FY 2022. It is expected to reach 287.34 GW by FY 2027, expanding at a CAGR of 21.60% during the FY 2023 – FY 2027 forecast period. The country intends to reach 450 GW of installed renewable energy capacity by 2030, with solar power accounting for 280 GW (more than 60%). By FY 2027, the share of RE is expected to come close to 50% of the installed power capacity.

Key growth drivers of the market:

The combination of low-cost financing and expected solar and wind module cost declines are some of the key factors driving solar prices down in the country. The recent adoption of the reverse auction regime for wind tariff trends are reflected by extending the high wind resource potential trajectory. The continued reduction in cost of renewable energy helps in creating sustainable and domestic-based energy system.

Key deterrent to the growth of the market:

Renewable energy projects have a decentralized nature and require proper system planning and integration in operation of transmission networks. The key purpose of the current transmission lines is to transmit the energy from regional generation units to load centers. RE projects are often set up in remote areas, away from large cities, and result in weak transmissibility. The distance and voltage levels, therefore, increase with the installation of REs plants far away from the load centers.

COVID-19 impact analysis:

In the wake of the pandemic, renewable energy sector was hit by multiple demand and supply shocks, but the impact on the renewable power sector was relatively mild as a series of relief measures were announced by the government throughout 2020 – 2021. However, revenue losses during the 2020 – 2021 period went up due to a fall in demand, high Aggregate Technical and Commercial (AT&C) losses, fixed charge waivers, and delayed payment collections.