India’s Azure says “must run” status cemented, construction paused

Qatar Solar Energy
Qatar Solar Energy
By Qatar Solar Energy on 2014-06-24 01:43:08
tags India’s Azure says “must run” status cemented, construction paused

April 15 (Renewables Now) – The “must run” status of renewable power generators in India remains unchanged during the lockdown, but, as can be expected, solar park construction has been paused, Azure Power Global Ltd (NYSE:AZRE) said in an operational update.

“We have been receiving payments towards electricity supplied from all our customers in normal course and there has only been minor curtailment of our plants,” the Indian solar power producer said on Friday.

Construction activities have been stopped until the end of the lockdown but the company does not expect any delay penalties as its counterparties have recognised its force majeure claim. “We do not foresee any increase in our project costs related to COVID-19 as of date and would note that metal and module prices have recently declined due to softness in global demand.”

Curtailment not allowed

Azure said power distribution companies (DISCOMs) in India have sent Force Majeure notices to inform generators they might be unable to meet their obligations under power purchase agreements (PPAs) due to COVID-19 situation. The Ministry of New and Renewable Energy (MNRE) has been quick to remind DISCOMs that the “must run” status of renewable power plants remains in place, curtailment of green power generation is allowed only for grid safety reasons, and payments for renewable power have to be made in time.

The Solar Energy Corporation of India (SECI) has already denied DISCOMs’ force majeure claims in which they cite reduced demand and delayed payments from customers due to the coronavirus.

Results and liquidity

Azure said it expects its revenues for the fiscal year ended on March 31, 2020 to be between INR 12.9 billion (USD 169.3m/EUR 154.7m) and INR 13 billion, which is in line with its earlier guidance of INR 12.77 billion – 13.35 billion. It added that it is “comfortable” with the revenue and operational capacity guidance for the fiscal years 2020 and 2021 which it published on February 12.

“Our liquidity position remains sufficient to continue normal operations through at least the end of fiscal year 2021, ending March 31, 2021, even if only some of the highest debt-rated counterparties, such as Government-of-India-owned SECI, continue to make payments for electricity received,” the company stated on Friday. It may seek working capital lines and revolving credit lines with domestic and international lenders to further boost its liquidity.

(INR 100 = USD 1.31/EUR 1.2)