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19-Feb2018

India Ratings retains stable outlook on solar sector

India Ratings and Research (Ind-Ra) in its latest report has retained a stable outlook on the solar sector and revised wind energy sector's outlook from negative to stable for the financial year 2018-19. The development comes in the backdrop of favourable environment for wind and solar energy sectors, as bids are being driven by central government agencies and power purchase agreements (PPAs) are becoming favourable to developers in terms of addressing grid curtailment and termination issues. However, it has maintained a negative outlook for the thermal power sector for FY19, owing to lack of visibility for tying up long-term PPAs. 

The ratings agency has stated that development of guarantee funds by states/bidders, incentives to local solar panels manufacturers and exploring of wind-solar hybrid projects and offshore wind projects show a sustaining growth momentum in renewable power. It also said that another favourable development helping the renewable sector is from the bond market. However, it noted that few obstacles 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 renewable developers.

According to the report, existing excess power tie-up of discoms and PPAs already signed with central and state sector generating companies for buying power from 40GW under construction thermal plants, prevent the need for purchasing power from private thermal plants under long-term PPAs. Also, it noted that thermal plants remain vulnerable to coal and water availability, thus certainty in these two linkages is hard to come by. For power transmission projects, Ind-Ra has maintained a stable outlook on the back of high project availability and stable receivable period of interstate transmission assets.


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