ICRA Downgrades Fifth Of Its Wind And Solar Portfolio Citing Headwinds
Fewer tenders for solar projects are being floated and new capacity addition is expected to be subdued in 2019-20 too, says ICRA.
Payment delays, regulatory uncertainty and a tight financing environment has forced rating agency ICRA to downgrade one-fifth of its rated portfolio in the wind and solar sector.
The rating agency downgraded about 20 percent, or 1.9 gigawatt, of its rated portfolio in the installed wind and solar power segment and revised outlook for another 10 percent of the portfolio.
“Payment delays (in Andhra Pradesh and Telangana) along with uncertainty over resolution of tariff issue for projects (in Andhra Pradesh) and instances of grid curtailments have adversely affected the credit profile of the wind and solar power projects having PPAs (power purchase agreements) with these state discoms,” said Girishkumar Kadam, sector head and vice president - Corporate Ratings at ICRA.
Fewer tenders for solar projects are being floated and new capacity addition, which has been slowing for the past 15 months, is expected to be subdued in 2019-20 too, ICRA said in a press release. “The industry segment is facing significant other headwinds in the near term which has impacted investor sentiment.”
Solar capacity addition was at 6.5 GW in financial year 2018-19 compared to 9.4 GW in FY18, ICRA said, adding that capacity addition is unlikely to grow.
ICRA, however, said the long-term demand drivers for solar energy remain intact owing to the “strong policy focus”.