Renewable Capacity Addition Drops in First Half of the fiscal year

The Renewable energy sector has seen a drop of 20% in the new capacity addition during the first half of the fiscal year 2014-15, when compared to previous year.

The capacity addition during the same period in previous year was 1376 MW against the 1094 in the current year.

A graph below shows the sector wise capacity addition during the year 13-14 & the year 14-15.

It is easy to notice that the capacity addition in the wind sector has increased by 7%, but at the same time the capacity additions in other sectors have dropped, specially the solar sector, which has witnessed a drop of 65%.

The surge in capacity addition in Wind, can be attributed significantly to the recent reinstatement of wind AD, leading to more confidence among investors.

Solar, however, has taken a setback due to the following reasons:

1. The reinstatement of AD for wind has diverted investors towards wind power.

2. The difference between wind and solar tariffs are moderate. Solar tariffs are in the range of 6-7 Rs. per unit where that of wind are the range of 5-6 Rs. per Unit. Capital cost per MW is still significantly high is case of Solar, when compared to Wind.

3. The poor performance of REC markets has impacted Solar more than Non-Solar.

4. Preferential tariffs are prevalent in only a few states, while many states have proposed reverse bidding scheme for solar power, with power being sold in the range of Rs 5-6. This has not positively impacted investor confidence.

The MNRE report can be downloaded here.

The Media article can be read here.

Contributed by Dheeraj Babariya