You are here: Home » Companies » Industry
Business Standard

Rating agencies upgrade wind, solar sectors to stable outlook from negative

Favourable environment, bids driven by Centre & friendlier PPAs are major reasons for the upgrade

T E Narasimhan  |  Chennai 

Rating agencies upgrade wind, solar sectors to stable outlook from negative

The wind and sectors in the country have received a stable outlook by compared to a negative one earlier. The development comes on the backdrop of a favourable environment for the two 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.

(Ind-Ra) has retained a stable outlook on the solar sector and revised the outlook on wind to stable from negative for FY19.

The agency said development of guarantee funds by states/bidders, incentives to local solar-panel manufacturers and exploring of wind-solar hybrid projects and offshore wind projects indicate a sustaining growth momentum in renewable power.


The is also optimistic about the opportunities in the near future, though cautious on the inherent challenges that could impact the if not addressed properly. An expert said that 2017 was a watershed year for the in India, with significant policy reforms such as competitive bidding in wind, record low wind and solar tariffs and GST roll-out. Besides, technological advancement and increased competition are steering new possibilities for clean energy in 2018.

Tulsi Tanti, Chairman and Managing Director, said that in India, investors are bullish and excited to be part of the renewable growth story.

Digitalisation of services, innovation in tower and blade technologies aimed towards making unviable wind sites viable, ensuring better yield and increasing turbine utilisation will be the key focus areas. The will collaborate further to improve the supply chain, enable grid integration and leverage digital technologies.


"While the wind industry's transition to the bidding regime created short-term challenges in 2017, it has laid the foundation for sustainable and inclusive sector growth. The wind is poised to grow to about 8-10 Gw annually, with 5-6 Gw annual bidding at the Central Government level, 3-4 Gw capacity auctions from the nine windy states and one Gw capacity expected from the PSU and captive markets. This will pave the way to unlock 300 Gw potential in India and harness the latent potential of non-windy states," he said.

Another rating agency Icra has also said that the wind capacity bidding programme announced by Ministry of New and (MNRE), Government of India is quite significant and provides a visibility to support capacity additions over next four year period, provided the same is implemented in a timely manner.

However, the has said that there are a few hurdles including uncertainties in solar panel costs, unpredictable behaviour of distribution (discoms) and operational troubles from manufacturers need to be addressed by renewable developers.

The rating agency says that avoidance of downtime of solar and wind plants are critical in ensuring the predicted internal rates of return (IRR). Uncertainties in are significantly higher in wind projects than in solar, owing to estimation errors during initial wind resource assessment, high dependence on single-turbine supplier for operations and maintenance, and high susceptibility to grid curtailment.

The tariff discovered in the reverse auction under the second MNRE (Ministry of New and Renewable Energy) scheme conducted by the Corporation of India (SECI) in October 2017 declined by 24 per cent to Rs 2.64 per unit as against Rs 3.46 per unit discovered in the first While this significantly improves the tariff competitiveness of over conventional energy sources, the viability of such tariffs remains a challenge. "This would depend up on the availability of long-tenure debt at cost competitive rates, capital cost, level and ability of the developer to identity locations with high generation potential," said Girishkumar Kadam, sector head and vice president,

There are also concerns about distribution utilities in some states looking at renegotiating or canceling the signed purchase agreements following the significant decline in tariffs discovered through the competitive bidding route, though the Centre has advised the states against any such move.

Creating a favourable ecosystem and better ratings may have its importance in the Centre's move towards achieving the targeted 175 Gw clean energy by 2022, said experts.

First Published: Sat, February 17 2018. 22:10 IST