Shares in Indian energy generators OPG Power Ventures (OPG) and Mytrah Energy (MYT) have fallen significantly in the past six months, despite the country's persistent chasm between supply and demand. Wind power generator Mytrah recently said it had suffered this year as a result of a less windy start to the monsoon season, leading to analysts downgrading full-year expectations.
Shares in Mytrah have fallen by a quarter in the past 12 months, while returns on an absolute-return basis are down 82 per cent in the past three years. This is despite poor energy infrastructure resulting in a chronic shortage of power in India. The International Energy Agency has estimated that Indian primary energy demand would more than double between 2013 and 2030 to more than 1,426m tonnes of oil equivalent (Mtoe).
Mytrah has built nine turbines so far this year, adding 50.2 gigawatts (GW) of power. This brings overall capacity to 578 megawatts (MW). Management expects to enter the 2016 windy season with 743MW of capacity. However, it has come up against one of the main risks of renewable energy this year - the unpredictability of the weather. Analysts at Investec Securities downgraded their forecasts for this year's cash profits by more than a quarter to €67m (£47m).
While shares in OPG Power Ventures have fallen back over the past year, the electricity provider has generated an 82 per cent increase in returns on a total return basis. In October, its Chennai plant entered into three-year, agreed volume contracts directly with industrial customers for 257MW of capacity. Industrial contracts - which are longer than the nationwide average - now represent 62 per cent of sales for this plant.
While the Indian government has submitted proposals to tackle climate change rather than cut emissions in absolute terms, it has opted to cut emissions intensity - the amount of carbon pollution per unit of gross domestic product - by around a third by 2030 from 2005 levels. This means coal will continue to play an important part in India's energy mix and so be beneficial for OPG.
