India made giant strides to become one of the largest renewable markets in the world after setting up an ambitious 175GW renewable target by 2022. India is the fifth largest renewable market with an installed capacity of 94.5GW (including both on-grid and off-grid) at the end of February 2021 and needs another 80.5GW to achieve its 2022 renewable target. In line with this, India is on track to accomplishing only 65-69% of its planned renewable target.

Solar photovoltaics (PV) and wind are the major renewable power sources in India. Solar PV emerged as the largest renewable power source in the country in FY 2021 with an installed capacity of around 40.6GW, overtaking wind which has a capacity of 39GW in FY 2021.

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India needs to add a large amount of solar and wind capacities in the remaining period to achieve its FY 2022 target. Wind and solar have consistently failed to achieve their annual targets over the last four years. As of February 2021, around 46.3GW renewable capacity is under implementation and another 35.1GW tendered. Of which, 34.3GW of solar capacity is under implementation and another 28.9GW was tendered summing up to a total of 63.2GW as a near-term pipeline. Wind power has 8.5GW capacity under implementation as of February 2021.

India will be able to achieve its target if all the projects under implementation and tendered are realized in another 13 months. However, factors such as land acquisition, delays in environmental clearance, grid infrastructure, limited financing options, lack of consistency in state policies, the financial health of DISCOMs, safeguard duty on import of solar cells and modules, lack of coordinated efforts between central and state governments, and the COVID-19 pandemic are slowing down the implementation.

The recent budgetary announcement of capital infusion in Solar Energy Corporation of India (SECI) and Indian Renewable Energy Development Agency (IREDA) will boost funding and liquidity. The basic customs duty on solar components will trigger a reversal to the trend of declining tariffs resulting in an increased burden on the cash trapped DISOMs.

India may achieve 65-69% of its FY 2022 target. The country will have a record year in terms of annual additions in FY 2022 against the backdrop of its massive project pipeline. Solar is expected to add capacity additions in the range of 15-20GW and wind is expected to add between 6-8GW in FY 2022. Although India may miss out on its FY 2022 target, ease of financing, liquidity infusion and strengthening of DISCOMs, and plans to increase manufacturing capabilities in a phased manner will put the country in a better position to achieve its new 2030 target.