Non-availability of coal could swiftly turn the once lucrative and viable coal power plants into stranded assets. However, utilities are attempting to address this risk by introducing minimum offtake guarantees and deemed generation clauses in the renewable energy power purchase agreements. Renewable energy projects, in most cases are exempt from environmental clearances, and significant advances have been made in recent years in streamlining the procurement of other clearances for renewable energy projects. The growing risk profile for thermal power plants is likely to result in increasing cost of capital for thermal projects. At the same time, with the tariffs for both wind and solar power dropping to unprecedented levels, power sector investors may shift focus to renewables.

Source: Mint May 15, 2017 18:45 UTC