Wind power can attract Rs 1 lakh cr investments by 2020: CRISIL

Wind power capacity in India has grown by five-fold in last 10 years, touching 23,000 mw in March 2015

Rating agency CRISIL in its latest reports said wind powre sector would attract Rs 1 lakh crore of investment by 2020. It said the wind-power capacity in India has grown by five-fold in the last 10 years, touching 23,000 megawatt (mw) in March 2015.

"Growth is being propelled by tariffs - at Rs 4-5.5 per unit currently - inching towards grid parity. CRISIL expects this trend to continue, supported by favourable government policy towards renewable energy," said the report.

In the last five years, nearly 60% of the capacity added was by private developers. The top ten developers, with a 20% share of capacity, have invested about Rs 12,000 crore as equity. The sector’s rising attractiveness has also been accompanied by a change in the lending approach from sponsor support seen earlier to one based on project cash flows.

“Grid parity, along with the recently restored fiscal benefits, make wind power projects profitable, sustainable, and scalable. As a result, CRISIL expects wind-power capacity to nearly double from current levels -- growing at 4,000 mw per annum -- in the next five years. That translates into an investment potential of Rs.1 lakh crore,” said Pawan Agrawal, Chief Analytical Officer, CRISIL Ratings.

Extensive simulation using CRISIL’s proprietary models indicated that lenders can sufficiently address risks in a wind-power project by focusing on two key mitigants: First is, maintaining adequate debt-service-coverage-ratio (DSCR), computed using a base case power generation at P90 plant load factor. Second is by creating a liquidity buffer linked to counter-party payment profile and seasonality.