Renewable energy auctions in November indicate that India continues to be on the path to reach 308 GW RE capacity by 2030 but below the government's expectations of 450 GW , Jefferies' monthly report on the sector has said.
"Nov 2023 saw 4 GW of RE tender awards. YTD (year to date) auctions are much higher than 6-9 GW done in FY23 and, largely in line with our estimate of 15-20 GW+ required annual run-rate for India to touch our 308 GW renewable energy (RE) capacity expectations by 2030. However, current rate is still below the government's 450 GW 2030 target," Jefferies' analysts wrote.
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They added that solar and hybrid, including peak power and round-the-clock, accounted for 70 percent and 25 percent of the bids. Ordering activity between December 2023 and the May 2024, when general election are due, was likely to slow down, with election embargo on government ordering sets in, analysts said, referring to the code of conduct that bars the government from taking any decision that can have a bearing on poll outcome.
From the Virtual Power Summit hosted by the brokerage and attended by corporates and regulators, a key takeway was that clean energy transition was accelerating and government targets pointed to RE investments rising 3x in the coming years as annual addition aimed at was 50 GW.
Power demand
This November, the demand for power continued to be strong as seen over the past three months. During the month, the demand rose 9 percent YoY on a high base of 11 percent YoY a year ago.
Power demand is likely to rise 7 percent YoY in FY24, in line with the analysts' estimates, despite the moderation expected in December 2023-January 2024. Coal stocks rose to normalised 11 days in December 2023 versus lows of seven days in the previous month, the report added.
The analysts' top picks in the segment are NTPC, JSW Energy and Power Grid.
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On region-wise distribution of demand, the report said, "West region accounts for the highest power demand in India at 32% followed by North at 31% and South at 25%. South saw strong demand rise of 12% YoY in November, while North-East was stable at 6%. Eastern and Northern regions were tepid at 3% and 2% YoY respectively."
Hydropower generation fell 31 percent YoY because of supply side issues, irregular rainfall and unusual dryness. To compensate for this, all-India thermal plant-load factor (PLF) was pushed to 66 percent (versus 61 percent YoY).
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