Rating agency ICRA has said its outlook for renewable energy (RE) sector is stable supported by continued policy support from the government, strong project pipeline and superior tariff competitiveness offered by wind and solar power projects -- both in the utility and the open-access segments.
Further, tariff competitiveness offered by the solar and wind power projects in utility auction route continued to remain superior with tariffs remaining below Rs 3 per unit despite the upward pressure arising from the imposition of customs duty on imported cells and modules from April 2022.
Girishkumar Kadam, Senior Vice President and Co-Group Head of ICRA Ratings, said the investment prospects in RE sector are expected to remain strong, given the policy impetus with a target to reach 450 GW by FY2030 and competitive tariffs.
"The capacity addition over medium term will be driven by RE segment, led by a strong project pipeline of close to 40 GW," he said.
The key challenges constraining growth remain on the execution front, mainly associated with land and transmission infrastructure as well as the slow but improving progress in signing of power purchase agreements and power sale agreements by intermediate procurers with state distribution utilities (discoms).
An improving financing environment along with softening in interest rate for the RE projects over the last 12 to 18 months period has been a positive for the sector, said ICRA
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