Icra downgrades RE sector rating to negative

New Delhi: Ratings agency Icra on Monday revised its outlook for India's renewable energy sector from stable to negative amid delays in payments from discoms and execution of projects.

The sector is facing headwinds because of the long delays in making payments by the State distribution utilities, delays in projects bid out over the past two years, difficulties in acquiring land for projects, securing transmission connectivity and financing in a timely manner, the ratings agency said.

Icra revises year-end outlook from stable to negative for renewable energy sector, it said. Looking at the challenges, Icra said it expects no growth in capacity addition in FY2020 and will remain at about 8.5-9.0 GW similar to FY2019.

"The headwinds related to payment delays, uncertainty over resolution of tariff issue for projects in Andhra Pradesh, as well as execution and financing related challenges for under-construction projects have impacted investor sentiments in the sector.

This is reflected from the slowdown in tendering of wind and solar PV projects by 37 per cent to 10.6 GW in 9 months CY2019 from 16.7 GW in the corresponding period of previous year.

Moreover, many of bids called by central nodal agencies remained under-subscribed," said Sabyasachi Majumdar, Group Head & Senior Vice President - Corporate ratings, Icra.

The capacity addition in FY20 will be primarily driven by the solar power segment.