New Delhi, Aug 20 India’s renewable sector remains resilient as healthy capital structure and adequate liquidity buffers support the sector’s credit profile, a report said on Wednesday.
According to Crisil Ratings, over 60 per cent of wind assets in India lagged their P90 level on average over the last five fiscals, mainly due to lower-than-expected wind speeds, which is a fallout of climate change and regional weather patterns.
"However, this underperformance has been counterbalanced by an increase in the share of solar power in the renewable energy mix to more than 65 per cent in fiscal 2025 from around 50 per cent in fiscal 2020, which has shown better operating performance against P90 benchmark and providing relative steadiness to the operating performance of the sector," Crisil Ratings said in its report.
The analysis of more than 350 solar and wind projects, comprising 12.5 gigawatt (GW) of solar assets and 8 GW of wind assets, with an operational track record of at least one year, indicates as much.
The P90 metric is a critical indicator of a project's financial health, as it is commonly used by lenders and credit rating agencies to estimate the project’s future cash flows available for debt repayment.
According to the report, based on the past solar irradiation/ wind patterns, independent agencies estimate P-90, which indicates the level of PLF that is expected to be achieved 90 per cent of the time.
To note, 1 percentage point lower generation than the P90 level can lead to a 3-5 per cent reduction in debt servicing cushion and a 1-2 per cent decrease in return on equity.
Although wind generation has underperformed for a while, the last fiscal year was the weakest performance in the past 5 years ,with a mere 20 per cent of capacities meeting or exceeding the P90 benchmark, the report said.
“As high as 45 per cent of wind assets lagged their P90 level by over 3 percentage points during fiscal 2025. Meanwhile, only 8 per cent of solar assets lagged their P90 level by 1 percentage point and the remaining by 1-33 percentage points," said Ankit Hakhu, Director, Crisil Ratings.
In contrast, 77 per cent of solar assets met their P90 level, our study showed, in line with the average of the last five fiscals.
“The leading developers have maintained a comfortable operating leverage (ratio of debt to Ebitda for operational assets) of 5-5.5 times, ensuring adequate cash-flow cushion (against debt servicing) of 1.2-1.3 times on average, to absorb the impact of lower-than-expected generation," said Ankush Tyagi, Associate Director, Crisil Ratings.
Nevertheless, wind power remains essential for grid balancing as renewable energy is intermittent.
Solar assets generate power during the daytime, while wind assets generate power during the evening and night, as well as during the low solar generation periods like the monsoon season, the report stated.
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