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More than 60% of wind power assets in India have performed below the P90 benchmark on average over the past five years. This trend is mainly because of lower-than-expected wind speeds, which are influenced by climate change and changing weather patterns. Despite this challenge, the renewable energy sector has remained resilient due to the rising share of solar power, which has performed better against its P90 targets and now contributes more than 65% of the renewable energy mix in fiscal 2025, up from around 50% in fiscal 2020. The healthy balance sheet structure and adequate liquidity of developers have also supported the sector’s credit profile.
According to an analysis by Crisil Ratings of more than 350 operational projects with a combined capacity of 12.5 GW of solar assets and 8 GW of wind assets, solar projects have been more reliable in meeting their expected generation levels. The P90 metric is considered very important for lenders and rating agencies, as it gives an estimate of the project’s future cash flows and its ability to repay debt. Even a small shortfall of 1 percentage point below the P90 level can reduce debt servicing cushion by 3-5% and equity returns by 1-2%.
Wind generation has been underperforming for years, but fiscal 2025 has been the weakest, with only 20% of wind assets meeting or exceeding their P90 benchmark. In contrast, 77% of solar assets achieved their P90 generation, consistent with their performance in the past five fiscals. Crisil Ratings noted that nearly 45% of wind assets fell short of their P90 levels by more than three percentage points, whereas only 8% of solar assets missed their P90 level by one percentage point, and the rest showed smaller deviations. Because of the growing share of solar, the overall variation in the renewable sector’s actual operating Ebitda compared to the P90 level was less than 10%.
Despite these shortfalls in wind generation, the overall credit quality of the sector has not been significantly affected. Leading renewable developers have maintained a stable operating leverage, with debt to Ebitda ratios at about 5-5.5 times. This provides an average cash flow cushion of 1.2-1.3 times against debt obligations, along with liquidity of 1-2 quarters. These financial safeguards have helped absorb the impact of lower generation and prevented any major credit shocks.
Even though solar has performed more steadily, wind power continues to play an important role in balancing the grid. Solar generation is largely available during the day, while wind generation is stronger in the evening, night, and during periods of weak solar output such as the monsoon. This complementarity makes a combination of solar and wind, supported by storage, a more reliable source of renewable power across the year. Hybrid renewable projects, combining wind, solar, and storage, are therefore gaining momentum and are expected to make up more than 40% of new capacity additions over the next three years.
Crisil Ratings emphasized that monitoring parameters like P90 performance and operating leverage will remain crucial to assess the long-term viability of renewable projects. Proper resource studies at the planning stage are important to avoid prolonged underperformance, which can weaken investor confidence and affect cash flows. The sector’s continued resilience will depend on careful management of these risks while expanding hybrid and storage-based solutions.
