According to ICRA, India will miss its target of 175 GW of renewable energy by year-end 2022 and is expected to reach about 120 GW-125 GW of installed capacity instead. As per ICRA’s predictions, the utility-scale solar grid capacity of 60 GW is expected to be close to being fulfilled, however the rooftop solar and wind energy targets will be missed by a greater margin. The rating was based on execution delays for projects that have been bid over the past two years along with concerns about the delays in payment by the state distribution companies. The capacity addition in the renewable energy sector is expected to remain subdued at about 8 GW in the financial year 2021. This is due to the disruption of the supply chain as well as labour availability issues caused by the Covid-19 pandemic.
Beyond delays due to the pandemic, the renewable energy sector continues to face issues such as delays in land acquisition and receipt of evacuation approvals, regulatory delays in tariff adoption and obtaining financial closure in a tight financing environment. While some discoms like those of Andhra Pradesh and Telangana have started clearing past dues, discom finances still remain a challenge. ICRA has predicted a revenue gap increase of around Rs 450 billion in the financial year of 2021 due to significant drop in revenue from commercial and industrial consumers during the lockdown.