Ind-Ra revises solar sector outlook to stable for FY20

<p>"However, timely payments from strong counter parties like SECI and NTPC, among others, and expected stable generation of renewable energy power in the upcoming months favour the stable outlook," it said. <br> </p><p> </p><p>The developments in the sector include Andhra Pradesh's attempts to negotiate renewable power tariffs or terminate costly power purchase agreements (PPAs) and increasing receivables period from select state discoms. <br><br>"On the positive side, the Centre's efforts to enforce letter of credits (LCs) as a payment security mechanism under PPAs can have a salutary effect on timely payments from off-takers over the long term," the agency said. <br><br>Ind-Ra further said that a key potential disruptor to the sector can be the recent trend of linking PPAs with back- to-back power sale agreement with state discoms, stressing on the intermediary nature of SECI and NTPC. "Overall, the positive and negative developments in the sector counterbalance each other, thereby resulting in a stable outlook," the agency noted. <br><br> </p><p>Referred from economic times</p><p>' placeholder="Enter headline of the news" minlength="5" maxlength="150"></p><p> </p><p>Owing to the recent announcements by certain states on renegotiation of power purchase agreements for renewable power tariffs, ratings agency India Ratings has revised the outlook for the solar sector to stable from positive for FY20. <br><br>The agency has, however, maintained stable outlook for wind power sectors for the remainder of this fiscal. "Revision in rating outlook for solar stems from resurfacing renegotiation fears and continued delay in payments from some of the off-takers," Ind-Ra said in a statement. <br><br>The agency noted that the stable outlook for both the sectors emanates from likely in-line operational and financial performance of projects with its projection for the rest of FY20, coupled with availability of adequate liquidity despite delay in payments from select state distribution utilities. <br><br>According to the agency, there were 25 per cent more downgrades than upgrades among renewable projects in Ind-Ra's portfolio in 2019 (till mid-August), mostly on account of delay in payments from the off-taker. <br><br>"However, timely payments from strong counter parties like SECI and NTPC, among others, and expected stable generation of renewable energy power in the upcoming months favour the stable outlook," it said. <br> </p><p>The developments in the sector include Andhra Pradesh's attempts to negotiate renewable power tariffs or terminate costly power purchase agreements (PPAs) and increasing receivables period from select state discoms. <br><br>"On the positive side, the Centre's efforts to enforce letter of credits (LCs) as a payment security mechanism under PPAs can have a salutary effect on timely payments from off-takers over the long term," the agency said. <br><br>Ind-Ra further said that a key potential disruptor to the sector can be the recent trend of linking PPAs with back- to-back power sale agreement with state discoms, stressing on the intermediary nature of SECI and NTPC. "Overall, the positive and negative developments in the sector counterbalance each other, thereby resulting in a stable outlook," the agency noted. <br><br> </p><p>Referred from economic times</p>

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