 "Off-grid wind power projects to face financing issues: India Ratings")
Projects to be rolled out under the newly approved offshore wind policy are likely to face challenges in achieving financial closure and needs to be backed by the public sector to avoid it, India Ratings and Research (Ind-Ra) said in its latest report.
The policy guidelines have proposed offshore wind generation capacities through public private partnerships.
India Ratings said rollout through the engineering, procurement, construction (EPC) route in the initial phase will be a viable option to attract private participation, given the inherent complexities of these projects and the uncertainties around an unexplored area of offshore wind generation. Private sector participation as developers would be restricted to sponsors with strong balance sheets wherein financing may be with recourse.
"The policy, if implemented well, will provide an impetus to the falling wind capacity additions as offshore wind generation involves limited use of land, and lack of land has been a major impediment to its growth. The policy could also help the country achieve the national installed wind capacity target of 60GW by 2022," said the report.
The ratings agency said offshore wind projects could be attractive propositions from a return perspective (18%), given the risk return profile. "However, these are contingent on timely executions which in Ind-Ra’s opinion could face challenges in the initial phase," it said.
While globally offshore wind power generation has been in existence across Europe and China, the total capacity set up till date is only 11GW. Given the limited experience, the sector may witness entry of international players with technical expertise to bid individually or in collaboration with Indian EPC players to gain an early mover advantage.
The agency said private participation in the initial phase of offshore wind generation will only be restricted to EPC services, and capacity additions by and large would come from public funding from state and central utilities.
State-run oil & gas and port players already having rights over coastal fields may express interest in a move to build captive plants, should their field be identified as potential wind site, said the report.
The policy guidelines have proposed offshore wind generation capacities through public private partnerships.
India Ratings said rollout through the engineering, procurement, construction (EPC) route in the initial phase will be a viable option to attract private participation, given the inherent complexities of these projects and the uncertainties around an unexplored area of offshore wind generation. Private sector participation as developers would be restricted to sponsors with strong balance sheets wherein financing may be with recourse.
"The policy, if implemented well, will provide an impetus to the falling wind capacity additions as offshore wind generation involves limited use of land, and lack of land has been a major impediment to its growth. The policy could also help the country achieve the national installed wind capacity target of 60GW by 2022," said the report.
The ratings agency said offshore wind projects could be attractive propositions from a return perspective (18%), given the risk return profile. "However, these are contingent on timely executions which in Ind-Ra’s opinion could face challenges in the initial phase," it said.
While globally offshore wind power generation has been in existence across Europe and China, the total capacity set up till date is only 11GW. Given the limited experience, the sector may witness entry of international players with technical expertise to bid individually or in collaboration with Indian EPC players to gain an early mover advantage.
The agency said private participation in the initial phase of offshore wind generation will only be restricted to EPC services, and capacity additions by and large would come from public funding from state and central utilities.
State-run oil & gas and port players already having rights over coastal fields may express interest in a move to build captive plants, should their field be identified as potential wind site, said the report.
