Home > News > Content

India Facing Renewable Energy Challenges

Aug 04, 2017

An effort in India, one of the world's strongest economies, to improve the renewable energy sector could face headwinds, Moody's Investors Service said.

India aims to triple its renewable power capacity by 2022 to 175 gigawatts by drawing on new solar and wind energy sources. The country is No. 4 in the world in terms of new solar power, No. 4 in the world based on cumulative wind power capacity and the government in New Delhi said it's committed to honoring pledges made toward the global Paris climate agreement.

In a quarterly publication, Moody's said that, as the economy expands, growth will continue in the renewable energy market in India.

"However, Moody's also sees challenges for renewable energy projects, notably weak offtaker credit quality and an evolving regulatory framework, as well as financing and execution risks, and aggressive bidding," the ratings agency said.

The International Monetary Fund said India may have issues with attracting capital because of the amount of bad loans on its books and the general health of the nation's banking system. In February, India saw $47 million in bonds due in February 2021 that will help drive capital toward climate change mitigation projects in India, the Asian Development Bank said.

Nearly half of India's energy comes from oil and natural gas and coal still dominates the power sector. Indian Petroleum Minister Dharmendra Pradhan said in mid-July that expanding domestic oil and gas developments, including shale reserves, and coal-bed methane could help the country achieve its goals of cutting back on imports.