Storage-Backed Renewable Energy Capacity In India To Surge Past 25 GW In 3 Yrs

New Delhi: Installed capacity of storage-backed renewable energy (RE) in India is likely to increase to 25-30 gigawatt (GW) by financial year 2027-28 from almost zero during 2024-25, according to a Crisil Ratings report released on Wednesday.

The incremental capacity will account for more than 20 per cent of the total RE capacity to be added over the three years, driven by the central government’s push to make renewables more sustainable, the report added.

Storage-backed RE projects provide an effective solution for the intermittent nature of RE generation. Such projects -- which include firm and dispatchable renewable energy, solar with energy storage, etc --supply power when required, supporting grid stability. For instance, these can provide green power on a monthly or hourly schedule or at the peak hours of morning and evening.

The government is pushing for these projects in a bid to make renewables a sustainable part of the country’s power mix. The thrust is reflected in the high volume of these projects in recent tender auctions, forming around 25 per cent (or 11 GW) of the total capacity awarded through tenders by central agencies in calendar year 2024 as against 11 per cent (or 2.5 GW) in calendar year 2023. Given the high energy requirements, these projects need an average oversizing to the extent of 2.5 times of contracted capacity. This has resulted in a cumulative capacity pipeline of around 34 GW. However, almost the entire capacity awarded through these tenders is either in development or in a nascent stage of construction, which exposes these to risks inherent in project implementation.

Risks in these projects typically manifest in the form of delay in securing offtake agreements, funding and execution. But we believe these risks to commissioning with material overruns would be low to moderate -- with off-take and funding risks being low. Further, the proactive approach by developers, especially towards land and connectivity requirements, augurs well -- limiting the construction risks.