Fitch Ratings: India’s renewable power generation declines

Fitch Ratings: India’s renewable power generation declines

India's renewable power generation has seen a notable decline according to recent reports from Fitch Ratings. The decline is attributed to various factors, including rising bond yields, inflationary pressures, and policy uncertainties. This article explores the key drivers behind this trend and its implications for the renewable energy sector.

Tata Power Renewable Energy, a prominent player in the sector, recently raised ₹15 billion via a 15-year bond at a 7.65% coupon, reflecting the challenging financing environment [1]. The bond issuance comes amidst rising yields and inflationary pressures, which have made it more expensive for companies to secure long-term debt. The Reserve Bank of India's failed 30-year sovereign green bond auction in June 2025 further underscores the market's caution and the absence of a "greenium" premium for green bonds [7].

Adani Green Energy Limited, another significant player, has been expanding its renewable power generation capacity, but the broader market trends have impacted its operations. The company's incremental solar power project of 125 MW at Khavda, Gujarat, highlights the sector's resilience despite the challenges [2].

The decline in renewable power generation is also linked to policy reforms and regulatory changes. The Ministry of Finance's Climate Finance Taxonomy and SEBI's updated ESG disclosure norms aim to standardize green bonds and enhance transparency, but these policies are still evolving and may not have immediate market effects [9].

To mitigate the risks associated with rising yields and policy uncertainties, companies in the sector are exploring innovative financing structures. Portfolio bundling of assets, such as rooftop solar and e-mobility projects, is emerging as a tool to diversify risk and attract institutional investors [10]. Tata Power Renewable Energy could leverage such structures to optimize its debt costs while aligning with India’s USD 1.3 trillion climate investment target by 2030 [11].

In conclusion, the decline in India's renewable power generation is a result of complex market dynamics and policy uncertainties. Companies in the sector are adapting by exploring innovative financing structures and strategic debt issuances. As the market evolves, the ability to balance financial sustainability with aggressive climate goals will be crucial for the sector's long-term success.

References:
[1] https://www.ainvest.com/news/strategic-debt-financing-india-renewable-energy-sector-analyzing-tata-power-renewable-15-year-bond-rising-yields-2508/
[2] https://www.marketscreener.com/news/adani-green-energy-says-unit-operationalised-incremental-solar-power-project-of-125-mw-at-khavda-ce7c50d2df89f423
[7] https://powerline.net.in/2025/07/16/green-yields-recent-bond-activity-in-the-renewables-space/
[9] https://www.ibef.org/industry/renewable-energy
[10] https://jmsr-online.com/article/a-comparative-analysis-of-green-bonds-and-conventional-bonds-in-india-financial-and-environmental-implications-257
[11] https://www.climatebonds.net/news-events/press-room/press-releases/indias-sustainable-debt-market-tops-usd-55-9-billion-new-mufg-cbi-report-maps-rapid-growth-pathways-2030