02 Sep 2024
According to a Fitch Ratings report, Indian wind and solar project finance transactions experienced a 4% increase in power generation for the financial year ending March 2024 (FY24), thanks to the commencement of new assets. Nevertheless, the total power generation fell just short of the one-year P90 forecasts.
P90 is a statistical metric that represents the level of energy output anticipated to be met or exceeded 90% of the time. It offers a conservative estimate used by investors to evaluate the feasibility of a project.
In FY24, solar generation increased by 2%, aligning with the one-year P90 estimate. Wind generation saw an 8% rise, though it fell short of the one-year P90 estimate by 1%. This represents progress from FY23, when wind generation was 5% below the P90 forecast.
Fitch’s report emphasises that the improved performance of these renewable assets is due to better operational practices and more favourable weather conditions. Fitch observed, "The stability and predictability of solar resources set them apart from wind assets." In fact, solar projects have regularly exceeded wind assets in terms of generation compared to load factor estimates.
The report highlights a notable enhancement in cash collection cycles for the rated restricted groups (RGs) in FY24. Receivable days for power sales have decreased to approximately 100 days, compared to around 140 days in FY23. This progress has been bolstered by the Indian government's Late Payment Surcharge scheme, which has helped expedite the settlement of overdue payments by state distribution companies (discoms).
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