The renewable energy sector, especially solar, could be next in line in becoming a stressed sector, something similar to thermal power. As such, the sector is already facing funding challenges. And to make matter worse safeguard duty, aggressive bidding, high operational cost, cost of funding and other factors like quality of solar module will only hurt returns.
Until now, the renewable energy sector, including solar and wind power, was financed by banks, venture capital funds, among others. However, funds have started to dry up for solar projects, which are put on a bid and where execution is taking place.
Crisil’s Infrastructure Yearbook released last month is categorical in stating that ‘caution is required in solar and wind bidding’. Read More