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The credit quality of India's large and rated renewable energy independent power producers (IPP) will reflect the different routes they have chosen for the next two to three years, said Moody's Investors Service in a report.

According to Moody's, the paths chosen by the renewable energy IPPs will have a varying impact on their respective business and financial risk profiles. Investment in green hydrogen could lead to further differentiation.

Of the eight rated Indian IPPs, the three leading producers by installed capacity -- Greenko Energy Holdings (GEH), Renew Power Private Limited (RPPL) and Adani Green Energy Limited (AGEL) -- each have installed generation capacity of over five gigawatts, which had grown via greenfield development and acquisitions, the report notes.

This rapid growth had been bolstered by supportive government policies, the competitive cost of renewable power in India as well as the availability of low-cost debt.

Moody's said AGEL's focus on delivering its large pipeline of plain vanilla renewable generation projects, which will help manage execution risk but could expose the group to rising costs.

Conversely, RPPL and GEH have shifted their focus to firm supply generation and pumped storage projects, respectively, where competition is less intense.

"Such plans could help preserve profitability but may expose RPPL to fluctuations in merchant power prices, and keep GEH's financial leverage at higher levels for longer," Moody's said.

While GEH and RPPL have announced plans to make material investments to develop green hydrogen production capabilities both in India and abroad Moody's does not expect AGEL to invest in the new business directly, given that a separate joint venture has been established by the Adani Group to look at new energy opportunities.

Investment in hydrogen -- if materialized as announced -- will significantly increase the IPPs' exposure to execution and funding risk beyond our current base case before countermeasures.

Due to their capital spending and refinancing needs, the IPPs have weak liquidity but good access to capital markets in general.

The outlook on two rated AGEL bonds expiring in late 2024 were revised to negative because of the uncertainty over AGEL's funding access, Moody's said.