Ultra-low renewable power tariffs discovered in recent auctions, coupled with uncertainties related to proposed duties on solar components, were the main reasons behind India coming down two spots in the renewable energy country attractiveness index in a year.
The weak credit quality of state-owned electric distribution companies (discoms) is a key challenge to grow renewables capacity, Moody’s said on Thursday. The agency said while distribution utilities have seen an improvement in liquidity, the extent to which operational efficiency has improved is still unclear.
The share of renewable energy in new capacity addition was around 60% for the last two years, while coal-based additions witnessed a sharp slowdown. However, Moody’s said the long-term viability of projects being put up at ultra-low tariffs discovered through competitive bidding remains to be seen.
Ultra-low renewable power tariffs discovered in recent auctions, coupled with uncertainties related to proposed duties on solar components, were the main reasons behind India coming down two spots in the renewable energy country attractiveness index in a year. The country now ranks fourth – trailing China, the US and Germany.
Though Moody’s said it has a stable outlook on the power sector, ICRA, its Indian affiliate, believes that reforms for the UDAY (Ujwal Discom Assurance Yojana) has seen mixed success. “The progress on achieving the operational efficiency improvement has a lot of ground to cover,” it said.
Though aggregate technical and commercial (AT&C) losses of discoms in 24 states under UDAY came down to 19.1% at the end of FY18 from 20.3% a year ago, losses in Uttar Pradesh, Bihar, Jharkhand and Madhya Pradesh were between 25% and 33%.
Source: financialexpress
