Fitch Solutions Macro Research on Tuesday said it is maintaining a positive outlook on India's renewables growth, excluding hydro power, irrespective of general elections as both the incumbent and the opposition support clean energy.
"We maintain a positive outlook on India's non-hydro renewables growth regardless of India's Lok Sabha election outcome, as both the incumbent government and main opposition remain strongly supportive of renewables growth," Fitch Solution Macro Research said in its outlook for India's renewable energy sector.
The Fitch Group unit expects the country's non-hydro renewables capacity to grow at a robust annual average growth rate of 11.1 per cent from 71.7 gigawatt (GW) in 2018 to over 204 GW by 2028, with solar being the main driver of this expansion.
Despite the strong renewables growth, it highlighted that coal will remain dominant in the country's power generation mix over the next decade.
"Our country risk team believes that Narendra Modi will remain the prime minister, and expects the National Democratic Alliance, led by Modi's Bharatiya Janata Party, to win the most seats in the Lower House but fall short of an absolute majority," Fitch Solutions Macro Research said.
Strong renewables sector growth has been seen as a key marker of Modi's power sector reform success, and it believes the Modi government will continue to encourage investment into the sector through supportive policies to reach the ambitious target of 175 GW renewables capacity by 2022.
It said, "We do not believe that the new government will back out of the existing renewables sector policies, as they have also promised to promote 'green energy' and aim to encourage investments in off-grid renewable power generation in their election manifesto."
The report also added that although the recent safeguard tariffs on solar cells from China and Malaysia will weigh on investor confidence in the short term, this will not have a significant impact on our longer term outlook, and investor interests will rebound and continue to strengthen the project pipeline.
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