60% Wind Projects Falling Short, Hybrids Set to Drive New Capacity: Crisil

Wind speeds are proving to be a huge issue for wind assets. Wind assets have underperformed over the last five years, with more than 60% of wind assets lagging their P901 level on average. This was mainly due to lower-than-expected wind speeds, which is a fallout of climate change and regional weather patterns, said a Crisil Ratings analysis.  This is one reason key wind asset owners like ReNew Global and others have begun adding a caveat to their projections, in the form of 'subject to favourable wind speeds'.

However, this underperformance has been counterbalanced by an increase in the share of solar power in the renewable energy mix to more than 65% in fiscal 2025 from around 50% in fiscal 2020, the research organization added. It showed solar power has better operating performance against the P90 benchmark and provides relative steadiness to the operating performance of the sector. It explained that healthy capital structure and adequate liquidity buffers have further supported the sector’s credit profile. 

Quick explainer on P90. When investing in the wind energy sector, the key variable is the wind resource, compared to the forecast. To minimise this risk, energy yield assessment studies are performed by wind experts to provide theNet Yieldand exceedance probability figures.

Thus, P50 and P90 are probability figures. The P50 figure is the average level of generation, where the output is forecasted to be exceeded 50% over the projects life. The P90 figure is the level of generation that is predicted to be exceeded 90% of the projects life.

The Crisil Ratings analysis of more than 350 solar and wind projects, comprising 12.5 gigawatt (GW) of solar assets and 8 GW of wind assets, with an operational track record of at least one year, indicates as much. The P90 metric is a critical indicator of a project's financial health, as it is commonly used by lenders and credit rating agencies to estimate the project’s future cash flows available for debt repayment. 

Thus, CRISIL adds, a 1 percentage point lower generation than the P90 level can lead to a 3-5% reduction in debt servicing cushion and a 1-2% decrease in return on equity.

Wind Underperformed, Solar Assets Remain Stable

Crisil Rating explained, "Although wind generation has underperformed for a while, the last fiscal year was the weakest performance in the past 5 years, with a mere 20% of capacities meeting or exceeding the P90 benchmark. In contrast, 77% of solar assets met their P90 level, our study showed, in line with the average of the last five fiscal years."

Says Ankit Hakhu, Director, Crisil Ratings, “As high as 45% of wind assets lagged their P90 level by over 3 percentage points during fiscal 2025. Meanwhile, only 8% of solar assets lagged their P90 level by 1 percentage point and the remaining by 1-33 percentage points. Thus, with more solar coming into the renewable sector, the blended variation in the sector’s actual operating Ebitda (wind and solar combined) against Ebitda at the P90 level was less than 10%.”

That said, the lower generation did not materially impact the credit quality of sectoral players. Says Ankush Tyagi, Associate Director, Crisil Ratings, “The leading developers have maintained a comfortable operating leverage (ratio of debt to Ebitda for operational assets) of 5-5.5 times, ensuring adequate cash-flow cushion (against debt servicing) of 1.2-1.3 times on an average, to absorb the impact of lower-than-expected generation. This, along with liquidity of 1-2 quarters, has mitigated any credit shocks.”

Wind Power Remains Essential 

Nevertheless, wind power remains essential for grid balancing as renewable energy is intermittent, said the CRISIL research report.

"Hybrid projects that combine wind and solar power, along with storage, have gained traction and are likely to account for more than 40% of renewable capacity additions over the next three fiscal years," as per CRISIL Research's estimate.

It explained, "Solar assets generate power during the daytime, while wind assets generate power during the evening and night, as well as during the low solar generation periods like the monsoon season. Thereby, the combination of solar and wind provides a source of renewable power supply throughout the day and across the year."

CRISIL also emphasized the importance of studying monitoring key parameters, such as performance against the P90 level and operating leverage will be crucial to assess credit risk. It said that as the renewable energy sector evolves, accurate initial resource availability studies are crucial to assess project viability. Prolonged underperformance can undermine confidence in cash flows, deterring investors and threatening long-term sustainability.