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Large scale wind power: There are risks ahead, no doubt
Aug 03:
Setting up large-sized wind power projects even at competitive rates come with their inherent risks despite 25-year old PPAs
8One risk is, of course, the vulnerability of revenues and cash flows to seasonality
8There is also the possibility of variance in wind power density across the years.
8The single-part nature of the tariffs under most PPAs, with revenues linked to the actual units generated and exported, is another risk. This risk is amplified by the lack of operational track record, in case of a new promoter.
8Risks can be further accentuated if the geographic concentration of the project is at a single location.
8Also, the fixed tariff nature of the project exposes the company to variation in interest rates on project debt.
8Further, there is the risk of dealing with a single counterparty, usually a state discom, where the possibility of delays in payments to renewable power developers cannot be ruled out, particularly when the tariff deals are higher than the prevailing market rate.
8There are also regulatory challenges from the implementation of the scheduling and forecasting framework for wind power projects in some states, given the limited experience in scheduling and forecasting in India in the face of the variable nature of wind energy generation.
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8One risk is, of course, the vulnerability of revenues and cash flows to seasonality
8There is also the possibility of variance in wind power density across the years.
8The single-part nature of the tariffs under most PPAs, with revenues linked to the actual units generated and exported, is another risk. This risk is amplified by the lack of operational track record, in case of a new promoter.
8Risks can be further accentuated if the geographic concentration of the project is at a single location.
8Also, the fixed tariff nature of the project exposes the company to variation in interest rates on project debt.
8Further, there is the risk of dealing with a single counterparty, usually a state discom, where the possibility of delays in payments to renewable power developers cannot be ruled out, particularly when the tariff deals are higher than the prevailing market rate.
8There are also regulatory challenges from the implementation of the scheduling and forecasting framework for wind power projects in some states, given the limited experience in scheduling and forecasting in India in the face of the variable nature of wind energy generation.
Click on Reports for more
