RE Investments Growth Dawdling Due To Grid Restrictions: IEEFA Report

Institute for Energy Economics and Financial Analysis concise report has discovered that India’s grid transmission infrastructure needs urgent transformation to not limit the escalation in renewable energy investments.

The report elucidated that during the FY 2018/19, India was not capable to capitalize on the momentum of the previous year in which a record 12GW of renewable capacity was added. With the safeguard duty, policy qualms etc, playing a part in the decline. Though, the lack of power evacuation and transmission infrastructure has been a key ground developers remain unbiased in recent auctions.

As per the report, India’s budding renewable energy additions are outgrowing the grid capacity. Transmission network capacity grew at a compounded average growth rate (CAGR) of 12% between FY2013/14 and FY2017/18. With wind power commissioning slowing down over the last two years, in large part owing to the current structural restrictions in India’s national transmission grid.

“As an accelerated investment in renewable energy capacity needs to be matched with equivalent investment in grid capacity expansion, the challenge now for India’s electricity market is grid integration of large amounts of variable renewable energy while minimizing integration cost,” the report affirmed.

While signifying that, even though tariff-based competitive bidding for projects has permitted the private sector to dynamically partake in the expansion of India’s transmission grid in recent years, an investment of US$ 60-80 billion will be required in the next five years to keep tempo with growing generation capacity.

Grid infrastructure is as much an investment opportunity as the renewable energy sector is in India, both of which are critically important for the country’s sustained economic growth and to reduce India’s excessive reliance on fossil fuel imports.

An efficient and robust grid network is crucial in reducing grid curtailments for renewable power and ensuring that renewable assets do not face the financial risk of asset stranding, as is currently occurring in the Indian thermal power sector.