Strong demand for RE projects in C&I segment: Icra

New Delhi: Rating agency ICRA on Tuesday said there are strong demand prospects for renewable energy projects in the commercial and industrial segment but regulatory risks pose challenges. The demand prospects for RE (Renewable Energy) capacity addition by Commercial & Industrial (C&I) segment are expected to remain solid, given the improved tariff competitiveness and strong sustainability/green initiatives by C&I players to meet their energy requirements through renewables.

The C&I segment itself accounts for about 40 to 45 per cent share in all India energy demand. In a statement, ICRA said that even assuming 20 per cent of the energy requirements are to be met by C&I segment through RE, the RE capacity addition requirement is estimated to remain significant at about 75 GW by 2030. As per the recent report published by ICRA on RE sector, Girishkumar Kadam, Senior Vice President & Co-Group Head - Corporate ratings at ICRA, said, "from the C&I off-taker's perspective, cost of sourcing of RE through open access remains at discount to grid tariffs after factoring the applicable open access charges."

The grid tariffs have shown a rise and the energy charge in the same also varies widely between Rs 6-7/unit and Rs 6-10/unit for HT industrial and commercial segment respectively, across the states, he stated. Nonetheless, the regulatory risk remains a challenge for open access-based RE projects due to dependency on open access and banking requirements, he noted. The open access and banking charges/norms also vary widely with effective cost ranging between Rs 1.5 to 5/unit across key states, with an increasing trend seen due to upward pressure on cost of power supply and continued high level of cross subsidisation in the tariff structure for the discoms, he added.