The Coronavirus-Related Impact on the Independent Power Producer Industry
Decreasing power demand and merchant electricity prices from the unprecedented current slowdown in economic activity and increased operating risks have affected companies in the Independent Power Producer (IPP) industry.The degree of coronavirus-related impact on any specific IPP will depend on its contractual arrangements, types of generating assets,and the financial strength of its contractual counterparties. Most DBRS Morningstar-rated IPP issuers benefit from strong contractual arrangements, a diversified base of generation assets,and investment-grade contractual counterparties, which suggests that rating changes in this sector will not likely occur unless the economic scenario worsens considerably from DBRS Morningstar’s base-case assumptions.
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