(Feature Image: 1772 Mw PSHPs Spain. Photo courtesy of Iberdrola/ ENR)

The question marks over viability of huge number of pump storage hydro projects (PSHP) being pushed forward in India currently were flowing in the rivers for long. This week, Moody’s investors Service (MIS) seems to have strengthened this after it downgraded Greenko Energy Holdings’ corporate family rating. It may be noted that Greenko is the biggest investor in PSHPs in India from private sector and a major part of Greenko’s new investments are in PSHP.

This makes the implications of MIS’s downgrade all the more interesting. MIS has noted that PHSPs are capital intensive and each PHSP will generate cash flow only after at least 2-3 years of construction (in reality it can be much longer than 2-3 years, the operative phrase here is at least). It also noted that the additional debt to be raised from Greenko’s capital spending, coupled with a rising interest environment will put further pressure on “GEH’s already weak financial metrics” and that Greenko’s high financial leverage due to its substantial capital spending program will keep its financial metrics below its downgrade trigger “for an extended period of time”.