ICRA-monitored solar PLFs remained stable in FY2021

Ratings agency ICRA today said the power generation performance of its monitored solar portfolio of 3.3 GW remained stable in FY 2020-21. About 52% of the sample capacity performed better than the estimated plant load factor (PLF) during the year, continuing the trend of the previous two years. 

In comparison, the power generation performance of the ICRA-monitored wind power portfolio of 3.2 GW was adversely hit during FY2021 primarily because of lower wind speeds. Only 11% of the capacities exceeded their respective estimates compared to 34% and 48% in FY2020 and FY2019, respectively. 

ICRA cited grid curtailments in some states and operating issues with certain OEMs among the other reasons for the underperformance of some of the wind plants. Nonetheless, the performance of the majority of ICRA-monitored wind power producers improved in H1 FY2022 on a year-on-year (Y-o-Y) basis, which is expected to lead to improved wind PLFs in FY2022 over FY2021, it stated. 

Girishkumar Kadam, senior vice president & co-group head – Corporate ratings, ICRA, said, “The PLF variability risk is relatively lower for solar power projects than wind projects as observed from the generation data for ICRA-monitored portfolio over the past few years. Moreover, the wind power projects are exposed to seasonality in generation with the majority of the generation reported during the high wind season from May to September.”

“In the context of grid curtailments, which has been also one of the factors for under-performance of wind assets in state of Andhra Pradesh and Tamil Nadu, the recent rules notified in October 2021 by the Ministry of Power on implementation of ‘must run’ status for wind and solar power plants as well as the order issued by Appellate Tribunal of Electricity (ATE) in August 2021 against grid curtailments in Tamil Nadu remain positive for the sector and are likely to act as a deterrent against grid curtailment by state distribution utilities.”

The median PLF in the key wind power generating states of AP, Gujarat, and Maharashtra dropped by 15-20% in FY2021 on a Y-o-Y basis. The drop for the wind assets in Karnataka and Madhya Pradesh was relatively lower. On the other hand, the median PLF for wind assets in Rajasthan and TN remained flat.

The solar power portfolio is more widely spread across various states against the wind capacity that is concentrated in six to seven high potential states. The median PLFs in the key solar power generating states remained largely stable varying between 17% and 20% across states, depending on the location and DC-AC ratio.

Vikram V, Vice President & Sector Head – Corporate Ratings, ICRA, added, “The credit metrics for a wind power project remain highly sensitive to its PLF level. For a typical wind power project, a 100-bps reduction in PLF level would impact the debt service coverage ratio of the project by 4-5 bps. Considering a 15-20% reduction in generation as observed in a few key wind states in FY2021, the DSCR would get impacted by 25-30 bps. Nonetheless, the credit profile of ICRA-rated wind IPPs remained largely stable in FY2021 led by reasonable buffer in cash flows for most IPPs, funding support from the parent for assets having a stronger parent, and available liquidity cushion.”