India is undergoing an energy transition from fossil-based to clean energy. Our quarterly Market Handbook helps identify and analyse trends, present data-backed evidence and connect the dots to present a short-term market outlook.
Key Findings
  • Total generation in Q1 FY22 was up by 17.2% compared to Q1 FY21, although Q1 FY22 also sustained Covid-19 second wave led lockdown similar to the Covid-19 first wave in Q1 FY21.
    • April: Up by 40.2%
    • May: Up by 7.4%
    • June: Up by 8.2%
    • Total Q1 FY22:: Up by 17.2%
  • Overall RE generation increased by 15.0%, while large hydro generation dipped by 11.7%, and coal/lignite generation grew significantly by 27.9% (vs. Q1 FY21).
  • RE’s share in average daily generation remained nearly the same in Q1 FY22 (vs. Q1 FY21), hydro saw a decline while coal/lignite notably increased.
    • RE: Share down from 11.8% to 11.5%
    • Hydro: Share down from 14.6% to 11.0%
    • Coal/lignite: Share up from 65.9% to 72.0%
Figure 1: Source-wise daily generation
Source: POSOCO. Note: RE technologies include solar, wind, biomass, waste-to-energy, and small hydro and do not include rooftop solar and large hydro (>25 MW) generation.
  • The amount overdue by discoms to power producers significantly declined by 34.0% in Q1 FY22 (from INR 1,35,177 crore in Q1 FY21 to INR 89,154 crore in Q1 FY22) owning to disbursement of funds under the PFC/REC liquidity scheme announced in Q1 FY21.
  • The Covid-19-led economic shock affected the discoms’ ability to pay power producers in time. In Maharashtra, Rajasthan, Madhya Pradesh, Karnataka, and Chhattisgarh, the payable days for power purchase increased by more than a month in Q1 FY22 (vs. Q1 FY21).
  • In June 2021, the Union Cabinet approved the revamped, reforms-based, result-linked scheme for the power distribution sector with an outlay of INR 3,03,758 crore over five years to provide conditional finance to discoms to improve their operational efficiency and financial sustainability.
Figure 2: Discom payable and receivable days for RE rich states
Source: UDAY portal (based on data disclosed by discoms as of 30 June 2021). *Data not available for these states; values derived from 2018–19/ 2019–20 financial reports.
  • After witnessing considerable gains in the latter half of FY21, RE stocks stumbled in April and May 2021 due to the second wave of the Covid-19 pandemic.
  • The share prices of pure-play RE developer Adani Green Energy fluctuated noticeably. It garnered noticeable investor interest after acquiring SB Energy’s 5 GW portfolio in May 2021. The stock fell sharply in June 2021 amid reports of NSDL freezing the accounts of three foreign funds that own sizeable stakes in the Adani Group of companies.
  • The stock price of Suzlon Energy and Inox Wind, a wind developer-manufacturer, garnered investor’s interest following the announcement of Q4 FY21 results. Net loss for Suzlon Energy narrowed to INR 54.8 crore in Q4 FY21 from INR 834.0 crore in Q4 FY20.
Figure 3: Change in key renewable energy stock prices (indexed to 100)
Source: Money Control.
* National Securities Depository Limited.
  • Indian RE developers have traditionally relied on the international green bonds market to access low-cost finance due to low liquidity and credit rating constraints in the Indian bond market. In the last six months (January to June 2021), USD 3.6 billion worth of international green bonds were issued by RE developers.
  • JSW Hydro entered the international market in Q1 FY22 with a USD 707 million BB+ (EXP) rated issuance to refinance its hydro assets.
  • Vector Green Energy is set to issue the first AAA-rated green bond in the domestic market to raise INR 1,237 crore (USD 165 million).
  • No notable fluctuations were observed in RE bond yields due to the Covid-19 second wave, unlike in Q1 FY21, where a temporary spike in bond yields was noted.
Figure 4: Bond yields* and key financial rates
Source: Reserve Bank of India, State Bank of India, Trading Economics, Money Control, and BondEvalue. *Current yield.