Owing to non-remunerative tariffs due to aggressive bids and falling renewable power tariffs, private thermal projects are staring at muted power demand, says a report by India Ratings (Ind-Ra).
According to the rating agency, private developers are facing more challenges in operating thermal power projects than renewable energy projects.
"In contrast, the large target by the government for renewable capacity addition and the focus on renewable purchase obligation along with falling tariffs in competitive bidding regime have led to an increase in demand for renewable energy," Ind-Ra said.
It noted that improvement in the financial profile of distribution utilities is important for power projects to have stable revenue receipts.
"In a falling electricity deficit scenario and excess energy tie-ups by distribution utilities, even amid high demand growth, projected generation capacity is well-placed to meet the demand," it said.
Solar tariffs have fallen considerably, even faster than solar panel prices, it noted.
"Pressure on price of solar panels is set to continue as there is a significant oversupply. The rise of new technologies in solar modules may also lead to a further price reduction," it noted.
In case of wind projects, grid curtailment remains a major risk while the distribution utilities are trying to manage the grid with increasing intermittent power, the agency added.
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