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Financial health of discoms hurdle for renewable energy sector: Moody's

The payment delays to the state-owned distribution companies are common, leading to a build-up of receivables from off-takers and an increase in working capital debt for renewable energy companies

The latest amendments to the Electricity Act, 2003 seek to abolish power "distribution licence" and allow any company to supply electricity in an area
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Moody's said that the weak financials of state-owned distribution companies have led to delays in the signing of Power Purchase Agreement (PPAs).

Abhijit Lele Mumbai
The weak financial health of state-owned distribution companies (discoms) will remain a challenge for India's renewable energy sector, where investments worth $225-250 billion are estimated to reach a generation capacity of 500 GW by 2030, according to Moody's.

The payment delays to these companies are common, leading to a build-up of receivables from off-takers and an increase in working capital debt for renewable energy companies.

The rating agency in a statement said that the weak financials of state-owned distribution companies have led to delays in the signing of Power Purchase Agreements (PPAs). This in turn occasionally results in project delays