Weak credit profile impact Neerg Energy, Azure Power and Greenko

Duke Energy Renewables

Renewable energy sector in India faces challenges, including weak credit profiles of many off-takers, Moody’s said.

The weak credit quality of off-takers, typically state-owned distribution companies, remains a key credit challenge facing RE developers such as Neerg Energy, Azure Power Energy and Greenko Dutch.

Moody’s has published a report on India’s renewable energy sector focused on the progress made in adding capacity and identifying the challenges ahead.

“Renewable energy’s (RE) share of new capacity additions for power generation has been the largest at around 60 percent over the last two years, while additions to coal-fired generation capacity have slowed sharply,” said Abhishek Tyagi, a Moody’s Vice President and Senior Analyst.

RE has been the largest contributor to new capacity additions over the past two years, a trend we expect to continue, and the share of fossil fuel-based generation capacity is likely to fall to around 53 percent by 2022 from 67 percent currently.

RE’s share of the electricity generation mix is likely to rise to around 18 percent over the same period from close to 7.8 percent as of March 2018.

This trend in part reflects the fact that wind and solar tariffs are now in most cases either comparable with or lower than domestic coal-based projects.

Coal-based additions have slowed sharply. This in part reflects the fact that wind and solar tariffs are now in most cases either comparable with or lower than domestic coal-based projects.

The utilisation rate for existing coal-fired capacity was around 59 percent in FY2018 and has been falling since 2010, while annual growth in coal-fired capacity is likely to slow to 4 percent-5 percent over the next five years.

Independent power producers and corporates are increasing their exposure to renewables. For example, NTPC plans to expand its non-fossil fuel-based capacity to 30 percent of generation capacity by 2032 from 2 percent as of June 2018.

Tata Power, India’s largest IPP, aims to increase the share of non-fossil fuel-based sources to 40 percent-50 percent by 2025 from 32 percent currently.

A growing number of large corporates are setting targets to reduce carbon dioxide emissions by increasing their use of RE and through energy efficiency measures.