HSBC downgrades Azure Power due to uncertainty on solar PPA

By: |
September 29, 2020 8:43 AM

“Azure’s bid for a 4 giga-watt (GW) renewable plus manufacturing plant won in October 2019 got converted into a letter of award in June 2020 but still awaits a power purchase agreement as state power distribution companies (discoms) remain financially stressed,” HSBC said.

HSBC, Azure Power, solar PPA, discoms, Adani Green Energy, solar plantsAs a part of the deal, the two companies will also build 3 GW of solar manufacturing capacities in the country (Adani 2 GW and Azure 1 GW).

Analysts at HSBC downgraded the rating of Azure Power to ‘hold’ from ‘buy’, as the government increasingly finds it harder to find buyers of solar power. “Azure’s bid for a 4 giga-watt (GW) renewable plus manufacturing plant won in October 2019 got converted into a letter of award in June 2020 but still awaits a power purchase agreement as state power distribution companies (discoms) remain financially stressed,” HSBC said.

Azure’s untied capacity is a part of the 12 GW projects awarded in the maiden auction for the manufacturing-linked solar scheme, through which Adani Green Energy will build 8 GW generation capacity and Azure Power will develop 4 GW and supply power at Rs 2.92/unit. As a part of the deal, the two companies will also build 3 GW of solar manufacturing capacities in the country (Adani 2 GW and Azure 1 GW). As FE recently reported, to address the issue of solar projects not finding power buyers, the government is planning to bundle higher priced projects (including Adani and Azure’s Rs 2.92/unit bids) with the ones quoting lower tariffs in the recent auctions, and offer them to discoms at an average composite tariff.

Apart from the aforementioned 4 GW untied capacity, Azure Power has 1.8 GW of operational and 1.3 GW under – construction solar plants across the country.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1BoM Q2 profit up 13% on higher interest income, lower provisioning
2On track to become Ebitda and cash positive by March 2021: Saurabh Kumar, founder, Grofers
3HDFC Life Q2 profit rises 5.6% to Rs 326 crore