5.7 GW solar capacity addition expected in FY17: ICRA

About 5.7 gigawatt of solar capacity is expected to be added in 2016-17 on the strength of improved tariff competitiveness of solar power and higher norm of renewable purchase obligation, ratings agency ICRA said on Wednesday.

"Going by the project awards and tenders floated as on date, about 5.7 GW of capacity addition is expected to happen in the current fiscal year (2016-17)," the agency's senior vice president Sabyasachi Majumdar said.

However, the actual addition to capacity would hinge on timeliness in the award of projects under state and central government policies and the subsequent signing of power purchase agreements (PPAs) with the buyers, it said.

The agency's study said the growth in capacity addition was largely being driven by a significant improvement in the tariff competitiveness of solar PV (photo voltaic), which has been facilitated by substantial reduction in capital costs on one hand as well as adoption of competitive bidding by procuring utilities on the other.

The amendment in the solar renewable purchase obligation (RPO) norm from 3 percent to 8 percent by FY22 in the National Tariff Policy is a key positive for the solar energy sector, it said.

The power tariffs quoted by independent power producers (IPPs) over the last six months have fallen to a range between Rs.4.34 and Rs.5.1 per kWh. Quoted tariffs are at a significant discount to the normative solar tariff (Rs.7.01) stipulated by the Central Electricity Regulatory Commission for 2015-16.