, China
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Debt projection rises for China’s state-owned IPPs amidst energy shift

S&P sees the debt of China’s independent power producers to rise by 9.3%. 

The debt of China’s state-owned independent power producers will likely increase by 9.3% as they accelerate clean energy investments, S&P reported. 

“China independent power producers [IPPs] that rely heavily on coal power will likely see improved operating performance, mitigating the cost of energy transition,” said S&P Global Ratings credit analyst Scott Chui. 

“However, we expect the strains will build on pure-play renewables IPPs. They will need to pay for projects just as tariffs and utilization rates are likely to decline.”

S&P estimated the IPPs’ debt will rise to RMB520b, which will likely be on top of the RMB364b worth of debt these entities added in 2023. 

“IPPs will have to ramp up capital expenditure to pay for this new capacity, weighing on credit metrics. We expect their average ratio of funds from operations to debt to decline to 11.2%-11.5% over 2024-2025, from 11.7% in 2023,” the report also read.

“Strong government support such as preferential borrowing rates will alleviate such strains.”


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