Renewables in energy sector pose regulatory challenge

Mumbai: The increasing share of renewables in the total energy mix of the country may lead to an increase in regulatory risk for coal-based projects in the long term, global ratings agency Moody's Investors Service said on Monday.

The higher share of renewable energy in the total energy mix presents a key regulatory challenge in terms of integrating new renewable capacity, while protecting investments already made in coal-based capacity, it said.

Despite the mounting pressure to move to a lower carbon economy, the agency does not consider this risk high, at least over the next 3-5 years.

It said predictability of tariff regulations enhances the credit profile of regulated electric companies and added that the Central Electricity Regulatory Commission has been responsive to changes in power sector trends.

"Over the last 20 years, regulations for the Indian utilities sector have been progressive and supportive of the power companies, and factored in technological advancements," its Vice President and Senior Analyst Abhishek Tyagi said.