The country’s renewable energy sector, mainly solar and wind power, has received stable outlook for the year 2018-19.
India Ratings anticipates favourable environment for wind and solar energy sectors as bids get driven by the Central government agencies and power purchase agreements (PPAs) are becoming favourable to developers in terms of addressing grid curtailment and termination issues.
According to Divya Charen C of the rating firm, “Development of guarantee funds by States and bidders, incentives to local solar panels manufacturers and exploring of wind-solar hybrid projects and offshore wind projects indicate a sustaining growth momentum in renewable power.”
Few hurdles such as uncertainties in solar panel costs, unpredictable behaviour of distribution companies (discoms) and operational troubles from wind turbine manufacturers need to be addressed by developers.
Ind-Ra believes avoidance of downtime of solar and wind plants is critical in ensuring the predicted internal rate of returns.
There is a possibility of discoms resisting new renewable PPAs because of existing excess power tie-ups and PPA tie-ups with upcoming thermal plants, the agency said..
The bond market favours renewable and transmission companies. Developers are looking for various avenues to raise funds for growth. Timeline between project commissioning and refinancing bank loans with bonds is decreasing as investors are getting tuned to the risks in the projects and developers are looking to generate cash for growth.
Ind-Ra foresees adequate liquidity back-ups and counter-party risks as the most critical factors for renewable projects.