Q3 2022 Renew Energy Global PLC Earnings Call
Thank you.
Thank you for standing by and welcome to the renewable energies third quarter fiscal 2022 earnings call.
All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question you will need to press the star key followed by the number one on your telephone keypad I would now like to hand, the conference over to Mr. Nathan Judge. Please go ahead.
Thank you and good morning, everyone and thank you for joining us on Thursday evening. The company issued a press release announcing results for the first nine months and third quarter of fiscal 2022 ended December 31 2021.
A copy of the press release and the presentation are available on the Investor Relations section of renewed website at www renewable power.
Okay.
With me today are <unk>, founder Chairman and CEO and Kai life, that's funny president of finance and interim steep.
Tomorrow, we will start the call by going through an overview of the company and recent key highlights.
<unk> will then provide an update on the quarter and then we were out you will wrap up the call with smart reiterating our adjusted FY 2022, EBITDA, excluding the impact of butter, our forecast of $810 million.
After this we will open up the call for questions.
Please note our safe Harbor statements are contained within our press release presentation materials and available on our website.
These statements are important and integral to all our remarks, there are risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward looking statements. So we encourage.
See the press release, we furnished in our form 6K and presentation on our website for a more complete description.
Also contained in our press release presentation materials and annual report are certain non <unk> measures that we reconciled to the most comparable measures and these reconciliations are also available on our website and the press release press release presentation and annual report.
It is now my pleasure to hand, it over to some odd.
Yeah.
Thank you Lisa and good morning, everybody on the call.
Our company has been publicly listed.
On NASDAQ for six months.
What has happened since our last earnings call in November .
Yet in fact excited to recap for you.
We continue to believe that all ended up being one of the most compelling investment opportunities in the renewable energy sector.
We realize that many investors are new to the story, so I would like to provide a quick recap on page five.
When you are involved in leading the newborn energy companies in India and also one of the largest renewable energy companies globally.
More than 70% of our portfolio is already operating and most of the assets that are in development have P. P is that all for 25 years with fixed status providing predictability.
Our portfolio is also balanced between solar and wind.
Our scheme in vertical integration differentiates us in multiple ways.
Couldn't be more efficient and lower cost.
Having greater access to cheaper capital and.
And investing for the future to retain our competitive edge in a young and rapidly evolving market.
This maintaining higher EBITDA margins.
Do you have a long track record of execution and have delivered equity between 16 and 20% consistently overtime.
We are in fact, taking about capital discipline as evidenced by our recently announced share buyback.
India is not one of the largest and fastest growing the newborn energy market globally.
And is committed to increasing the installed capacity of renewable energy.
Well not fall fall 2013.
Renewable energy makes sense for the consumer as it does the north called source of new electricity capacity in the country today.
The Indian market used to mature and this is really playing to our strengths.
On page six we have provided a broad segmentation of <unk>.
I'll give you the market to be.
Broken into the clean.
Renewable energy, which currently has the most competition.
Underdone opportunities at the lower end of our targeted range.
And the higher they don't segment and intelligent edge solutions.
D and corporate Ppas that provide higher returns and lower competition.
More of a growth there'd be some segments that have higher return.
The new has a differentiated advantage.
Focusing on the intelligent energy solutions segment for a moment.
Distribution companies are increasingly need even makes us believe that has a more consistent also amplified.
Without the expertise across renewable energy technologies, including wind solar and storage, we believe there'd be a lot of the fuel renewable Indian renewable energy provider that can provide base load power in the market today.
In addition, given our expertise and Boston investments and be intelligent energy solutions segment. We believe that we are the lowest cost provider.
Tom Palmer, something noble energy sources in India today.
I've locked in growth remains robust and on track with our previously announced guidance as seen on page seven.
As of today, we have seven two gigawatts operating.
From $5 six Gigawatts that we had operating nine months ago.
We continue to expect FY 'twenty to adjusted EBITDA, excluding the impact of weather, which was approximately $55 million in the first nine months of this fiscal year, so far to be approximately $810 million.
I do want to point out that all of our the expected 522, EBITDA is coming from operating and computer capacity.
We expect to deliver EBITDA of $1 $1 billion annually from our pinpoint two gigawatt portfolio.
Which is nearly double our EBITDA that'd be reported last year.
We do have confidence in achieving this growth as about $1 billion.
After EBITDA should be generated from coal Commission projects all have signed Ppas that are in construction fees.
Moving onto page E on recent developments since our last earnings call.
There has been some drag lessen because I'll be Andhra Pradesh discount called keys.
We have also got favorable to lead some of the Cogs and regulator in Karnataka in Maharashtra seats.
Finally earlier this month and we anticipate a ruling on the Andhra Pradesh issue shortly.
Please note that the favorable ruling would improve our financial position relative to our guidance.
Despite.
All of the interest rate dislocations you.
We have also just completed a $400 million green bond issuance with a U.
The us dollar coupon of 4.5%.
Net of hedging costs the landed interest rate in INR terms was eight 4%.
The initial use of proceed that expected to refinance near term maturities.
The company.
About $5 million of interest expense annually.
We continue to see favorable terms to continue refinancing at rates better than we currently have which we will discuss shortly.
We also announced this quarter the sale of our rooftop business, probably about a $90 million.
<unk> EV to.
Suzanne trailing EBITDA multiple of about nine five times.
We decided to monetize this business for several reasons.
Structurally the rooftop business has a different business than a large scale ground Mount Lucas and it still allows us to allocate capital to higher larger utility scale projects.
In addition, we saw an attractive opportunity to deploy capital to buyback our stock at an EV to run rate adjusted EBITDA multiple of only seven six.
We think significant value for ourselves.
This is also a good segue into a $250 million share repurchase program.
Earlier this month, we announced the share buyback as he found the value of the stock to be our highest return opportunity or scheme.
We are committed to capital discipline, and we'll allocate capital to the highest return opportunities whether they're decent organic growth.
And they are our own shares.
Do I need to accounts receivable on page nine.
As of December 31, 2021.
Outstanding accounts receivable stood at $606 million.
Which we recognize as life.
We believe that the DSO. However has peaked at the end of the second quarter of 2022 and will continue to improve going forward.
And when you look into what constitutes a past due accounts receivables you'll see that first did this come and gone, but the vast majority of hardware, but your receivables.
We believe that we can improve our payment cycles with these themes in particular do you have for the first time, they cannot customers in Karnataka, Maharashtra and interpretation to Cogs to accelerate the company.
The increase in receivables was understandable and Kobe. However, no electricity demand is at new highs and payments of the discussions are being made in a more timely manner.
And therefore, we have made some progress towards improving our dsos.
You cannot take the high court directed that this comes in the state to clear all outstanding do it stable, which is about $90 million for us.
In my last slide the speed the electricity regulator directed the speed distribution company.
With a clear plan to clear all outstanding receivables.
I'll talk to you some multiplications proceeding and we expect the ruling later this year.
Please do note that supposed to be coming from the speeds that you been a favorable court ruling is likely to be over some period of time.
Yeah.
Turning to the court case in Andhra Pradesh, or would it be the drawn out case is finally considered appearing and we do expect a ruling by no later than the end of March.
We believe that we have a strong case and if you've been the case.
We would look to recover about $200 million over a period of time.
A recovery of the recovery of past due receivables, there's an upside to our long term guidance provided last year and even not need to issue new shares if an outcome in any of these cases is unfavorable to us.
The combination of company initiatives legal and regulatory proceedings.
Central government support.
Improvement in electricity demand for distribution utilities, and a shift towards central government agencies that have a strong record of on time payment will result in a major improvement in our dsos over the next several years.
With regard to partnerships.
Recently announced joint ventures.
With N D.
India's leading engineering and EPC company.
And fluids, a global leader in battery technology.
These initiatives are consistent with our past practices of making smart investments now to be a leader in its future large opportunities.
We believe that these partnerships will provide competitive advantages to us.
And position us extremely well for the next phase of growth in India and renewables.
Which will be based around both hydrogen and batches.
And in fact, India has recently announced the green hydrogen policy.
And there's only about a few countries to have announced such a policy.
The policy includes major incentives such as speed transmission.
Open access and provisions for bank part of it.
We believe that the government of India once major industries to commit to Green energy.
Decarbonization and an important step forward would be a green hydrogen purchase obligation.
Overall, we think that green hydrogen represents about a $60 billion of investment opportunity by 2030.
Approximately 70% of the Capex required for the Green hydrogen plant is renewable energy, maybe you expect to contribute that expertise to the joint venture.
And then he has a depth of knowledge on the last mile. We electrolyze it connecting to the plant and storage et cetera.
We believe that this partnership is at the lowest cost providers of green hydrogen in India do.
Do you expect that there will be numerous bids over the coming years, and we will provide updates to all of you as events unfold.
We also entered into an agreement with QM to providing market, leading energy storage solution in India.
He brings significant intellectual property leadership into battery segment.
And currently is the only company that has an operational utility scale battery operating in India at the moment.
The projected market size is equivalent to about 27 gigawatts by 2030.
Before I turn it over to collage I would also like to say a word on our CFO Bluetooth announcements to move on from the new pop up.
To pursue other interests.
Since joining us in August 2019, with who has been a valued member of the leadership team and played an instrumental role in the company's listing on the NASDAQ last year.
We do express our sincere gratitude for his contribution and wish him the best for his future endeavors.
He is a designation that'd be effective on or around 31st March 'twenty to 'twenty two.
Collage lots of money will be the interim chief financial officer until the border points our next CFO .
As an introduction to collage to most of you would previously have met.
A collage have been a valued member of the new senior management team right since the inception.
About 11 years ago.
Has that it keeps me responsible for all of the new fundraising and all of our M&A activities as well as a gastroenterologist management.
With that I will turn it over to Carlos will discuss our quarterly results. Thank you.
Thank you so much.
Looking at page 12, which provides highlights of approach with big water. We have seven two gigawatts operating as of today. After the addition of one one gigawatt this quarter.
The one seven gigawatt edition this fiscal year was particularly commendable given the challenges of Covid and supply chain disruptions.
Our revenues are labeled income under ifr. It in the first nine months of fiscal 'twenty, two rose, 26% on the year, while our adjusted EBITDA increased by more than 27% and the Gaslog equity jumped almost 116%.
Turning to page 13, which provides the reconciliation of weather adjusted he brings to our reported results, but there are definitely EBITDA in the first nine months of FY, 'twenty, two or $626 million or about 77% of IDEXX cycling through whether adjusted EBIDTA guidance of $810 million, which puts us on track.
Cheap our guidance weather improved from last year, although it remains below normal levels and has had about a $55 million negative impact in the first nine months of fiscal year.
We do expect our operating capacity will be around $8. Two gig award by year end, although it is possible that commissioning or some small amount of capacity may slip into the early parts. Okay. Pros. We have recently signed binding term sheets for another 500 megawatts of acquisitions, which will add to the Airbus number.
One of the frequent questions. We get asked is about supply cost inflation, which we discussed on page 14.
<unk> got four megawatts added during the first nine months of this fiscal year had very little impact or higher supply cost.
Whilst there has been some increase in cost relative to budget for projects. We are delivering for the remainder of the year. After considering the lower financing costs that we are realizing in the market. Today, we continue to expect that our projects under construction will deliver an equity either within our targeted range of 16% to 20%.
Turning to slide 15.
Which highlights our interest rate risk management strategy. The majority of our debt is fixed and only about 15% to 16% of our total debt would have near term impact from increasing interest rates increases every hundred BP change in short term borrowing rate for all of these are variable costs that really equal to about a 2% impact on the cash flow through equity annual.
So again very much newness.
Despite the recent increase in interest rates globally, we are still seeing very favorable debt sanction below 8% and we can get market and from <unk> lenders, which is less than our average cost of debt, we have financed and refinanced debt in excess of $1 5 billion for the last 12 months because that was in decline in our average cost of debt.
9% going forward compared to nine 4%, we recorded over the past nine months and recent transactions, we have seen great as lowest economic because then they're not the same as well we are working towards refinancing all floating rate debt to fixed rate for the long term.
I'll turn it over to someone for guidance and closing remarks.
Yeah.
Yeah. Thank you kill Us I'm very happy to report that despite the uncertainty around supply chain issues in COVID-19 .
We do continue to be on track with our adjusted EBITDA guidance for.
This year we'll.
We do believe that given the TD $810 million of EBITDA. After excluding the negative impact of better, which we've said has been about $55 million. So far through the first nine months of fiscal 2022.
As it looks currently we also should be having eight two gigawatts operational bite on April I mean, depending on when acquisitions close.
Turning to slide 17, we are also reiterating our guidance on the run rate EBITDA basis.
Once our 10 two gigawatts for full portfolio has completed over the next 18 months or so.
Expect EBITDA would be at least $1 1 billion.
We expect that you would have about $5 $7 billion of mixed debt on our books are at four nine times debt to EBITDA leverage ratio.
Once the 10 gigawatt 10.2, Gigawatts is fully completed.
Expect our cash flow to equity runway to improve meaningfully as well to $400 million on an annualized basis. Once the 10.2 gigawatts at all producers.
Importantly, our portfolio is fully equity funded.
In fact, we do not need to issue any new shares to reach 18 Gigawatts.
And I didn't give a lot of gaslog innovation should be sufficient to self fund three and a half the four gigawatts of growth annually without losing any external equity.
That's like the salt and even though of course, we have to go dig any person sanction.
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Ask your question.
Our first question comes from Julien Dumoulin Smith from Bank of America. Please go ahead.
Hey, this is actually Cody Clark on for Julian Thanks for taking my question.
So first can you give us some additional color on the year end 'twenty two operating portfolio guidance of $8 two gigawatt.
500 megawatts of acquisitions coming down maybe day, so it's a month or two and the remaining 300 megawatts.
As organic order yeah.
Not that they are definitely.
No. It is it is organic so we will be commissioning and others.
So lately about 300 to 400 megawatts between now and the end of the financial year.
And then the balance as we said there's the acquisition.
Got it and confidence in the adjusted EBITDA guidance is not really impacted because these are small contributions to the full year guidance anyways.
That's right that's right.
Okay, and then just a follow up around valuations for renewables projects I'm. Just wondering if you can talk through kind of the strategy of potentially selling minority stakes in assets. It seems like it could be accretive to be able to redeploy the capital into new growth projects or even further support the buyback based on where shares are trading just curious if you have any thoughts.
Sure.
Yeah, So you're absolutely right I think current T V C.
Sales in the in the fall.
Assets in India, and the private market at about anything from nine to 10 times and so there is an opportunity and you know if you saw that in the sale of our rooftop portfolio, which is a nine at all times. So our view is that we should be for the quality of assets that we have we should be able to get those kinds of multiples.
Going forward and frankly, there are a number of people who are financial investors and others, who would like to acquire these assets from us and be in partnership with us. So that is something we can certainly look at doing.
And recycle capital and sort of increase the velocity of our capital in a little bit historically, we have not done that but I think it's something that we're now looking at doing.
More off as we go forward and and of course with the capital that we can get freed up we can then deploy that into other.
High return projects all use that for the buyback that we've already announced.
Those are obviously uses of that capital.
And so that's really what we're looking at at this point, though of Diamond of course, what that also means is that for the capital that we would have invested in those projects.
Not on those then obviously tends to go up quite substantially because we have been able to sell minority stakes at much lower than than equity eidos for those projects. So it's actually a fairly.
Positive thing for us to do it allows us to increase the returns on equity are doesn't I invested capital and allows us to recycle capital at a faster pace and deployed into whichever areas. We feel are giving us the best returns.
Yeah.
Okay understood. That's helpful and just one last one if I can just around weather impacts you know it continued to be a drag in the third quarter and just wondering if you have any updated thoughts on maybe reevaluating the with the wind resource baseline across your portfolio at year end.
Yes, certainly.
Look at doing that as you know.
He had a lot of data.
The year prior and then of course this year has also not been good.
Of course, the years before that but by and large in line with the long term forecast, but I think having had two years of subpar performance. We will I think over the course of this current year, we will look at you know.
Looking at the long term forecast.
<unk> hired an external agency to help us do that we'll probably wait for this current high wind season over the course of the middle of this year two to get done so that we have a little bit more detail and I think then we will examine and see whether there is any any.
Medical reason for us to look at changing any of our forecast and if there is of course will be let you all know, but we'll we'll do a redo of considered thoughtful exercise on that.
Okay got it thanks, so much for the time appreciate it.
Thank you once again, if you wish to ask a question. Please press star one your telephone and wait for your name to be announced.
Our next question comes from Justin Clare from Roth Capital Partners. Please go ahead.
Everyone. Thanks for taking our questions here.
Hi, just first off hi.
First off on fiscal year 'twenty three just wondering if you could give us an update on how you're thinking about a portfolio of growth as we move into next year.
If you could share how many megawatts you might add for a wind or for solar next year and then how much could come from in house development versus acquisitions, and then maybe also how youre thinking about the potential for new auctions next year and whether you could you could you know win in new auctions and then I'll.
So add those assets.
Over the next year.
Yeah, Nathan do you want to talk about our guidance for next year.
Yes, Hi, Hi, Justin So when you look at our.
Expectations for next year.
We have essentially.
I'm going to be bringing on roughly about it.
Well pinpoint three gigawatts over the next 18 months from our current level that does not include the 500 megawatts of binding term sheet.
The acquisitions that we've just announced.
So as we look at it today.
Right now, we're expecting that to come on kind of mid summer of next year.
And then we're also continuing to evaluate the M&A market clearly M&A markets are dependent upon valuation and.
Obviously, our share prices at a level that we view.
Positively relative to that market. So we still continue to think theres plenty of opportunity.
And we'll make that commitment to capital where the highest return is.
So Mike do you want to talk about.
The outlook for the market.
Yeah look I think the outlook for the market is extremely positive still.
There is as you all know there was a backlog of a P. P is that he had to still get done.
All of that backlog is now being cleared.
In light of new demand that is coming in from the utilities.
We saw.
Over the course of the Covid impacted year of those power demand growth was actually flat more or less but in the current year current financially have you seen power demand growth at about 5% to 6% and the expectation is that that will continue over the course of the next year that India GDP continues to stay robust between disk.
The next year and as that demand is getting manifest clearly the utilities need to buy more power and that therefore, leading to more demand, which is obviously very fundamental to having more bids.
In addition, there are new.
Also the demand coming in.
One of course is the corporate PPA market.
That is now increasing pressure on corporates as well as for them and from their standpoint, a potential cost reduction opportunity by buying a renewables directly from people like us. So we've seen that market growing quite substantially.
As well as the carbon market actually because there are a number of people who are coming in and looking only to buy carbon portion.
And then of course there are the two.
Two other source of demand.
One is the Indian railways, which is flexible and net zero by 2030 and consumes.
Almost about 3% to 4% of India's total electricity generation, so that is something that.
They'd be able to come into the market now in a fairly big way and then of course, the opportunity for green hydrogen, which as I said in my remarks. The government has now announced that green hydrogen policy and is going to be pushing that rollout quite quite aggressively. So all of those are going to lead to increased demand.
You will see probably therefore.
More bids coming up through the course of this year as the backlog of the oil projects gets cleared up and all of that therefore will result in significantly increasing everybody's pipeline, including our rooms.
Including our own fault.
Commissioning.
Between one and a half to.
A few years out.
From this point on so I didn't that's how the demand side will develop its looking fairly robust at this point in time.
And I guess, that's good for all of us in the industry.
So let me let me pause there.
Okay, Great no that was that was really helpful.
And then I guess, if we could shift to just the supply chain here.
You've heard about delays in wind turbine manufacturing due to challenges with the supply chain and then not being able to get the materials that they need.
So can you just give us a sense for are you getting your turbines on time and the equipment that you need to keep projects kind of on the on track here or are you seeing.
Potential for delays.
So you know what Justin for the projects that we had to commission this year.
We've got all the turbines for those projects. So endorsed in any case have to be done literally over the next month or two so those are all under control.
<unk> that will be commissioned over the course of the next financial year.
Those are those deliveries are still a few months out and at this point, we haven't at least our suppliers have not indicated to us.
The delays are on their.
Flight schedules.
You know I don't have anything specific to report to you on that front right now, but now that you've mentioned it to me.
I'll keep an eye on it and in fact proactive you're going to have these conversations but so far. Thank you we have not heard anything.
That shrunk from our suppliers.
Okay alright good.
Yeah. Yeah go ahead no go ahead.
No. The only other thing I was saying is that we have diversified our supply.
You know winter lines coming out this year from desktop and Siemens Gamesa and envision so we're not overly dependent on any one of them and frankly, they have all sort.
Sort of dialed back on their capacities Cordelia already and those I think are pretty much.
At least as far as they've indicated to us under control right now.
Mhm mhm, Okay. Good and then maybe just one more for me on an interest expense here.
Or just interest rates generally I think you have what is it 29% of your debt is variable rate right now I'm just wondering if you're considering fixing that fixing those rates and if you have the ability to do so.
And then how are you thinking about interest rate risk for projects that youre still.
Developing or building any way to hedge interest rate risk or any way you know how are you thinking about that.
Yeah, I'll, let get lots of attention.
Yeah.
Yeah Yeah.
No you don't have thought is the variable rate interest loans are concerned.
We have a lot of work.
Looking on that actively and we expect that when all of the 27 and 28% at least 20% would be fixed.
In the next.
Six to 12 months time period and.
What we're also trying to do we made when we have variable we're negotiating much lower rates. So we're seeing rates.
Even below at around 7% or thereabouts.
And then that leaves actually them, giving us the ability to you know wait outcome will be interested in feedlots, which happened so.
We try to manage debates in that fashion, where really believe correct loading.
It goes to seven seven and a half fixed rates are between 80. It in a house in the middle market and there's like 1% differential, which we see more or less.
The second part of the question as far as you know projects, which are under development is concerned.
Again.
We are a bot.
Borrowing and some of these projects dollar loans.
Where we hedge the dollar exposure and the interest rates out to five years.
And that fixes the rate.
And the transplant that we negotiate those and Billboard.
And that gives us the ability to still end up at the same level because the hedging costs also sort of narrow down a bit as interest rates increase.
<unk> does play out at this point.
We have very boring rupee for financing our projects bad again via borrowing.
Floating to some extent and wherever possible. We are also getting fixed rate loans. We are fixing it for the long term. So true that we're managing and lastly, I'll say that Florida projects, which are under development all of which we built in future. We will factor in the interest rates are at a higher level of long term interest rate assumptions.
Closer to a seven 5% in that range, so that gives us enough.
And from now on to absorb any interest rate increases.
Okay.
The thing that's in there.
Just add to that and see that in India interest rates at this point of view.
Have not really gone up.
And as its latest policy meeting the RBI computer adaptive any dovish tone.
And you'll get an education is still within the Rbis.
I have a band of 4% to 6% so it's still within that band, although at the upper end of that range.
So our expectation is that they can get interest rates at least will continue to be not increasing very substantially at this point and so that's what gives us the opportunity of shifting a little bit more.
Wanting to repeat borrowing.
And within that also as I said, if you do if you do take the risk of available we tend to get much lower rates.
But as we all recognized interest rates might trend upwards over the next year or two and therefore, we are looking to fix a substantial part of even the variables involved in that you have and all of that is happening at rates of around 8%, which is significantly below our current overall.
Overall cost of borrowing at eight 9%. So there is still an opportunity for us as we can do to fixed rates to bring down our cost of barring further down from there.
And of course for new projects is can I said they'd already assuming higher rates and so therefore, we're building that into the guidance. So we will not be for new projects likely to be impacted by higher rates I'm going public because you would have built that into our return expectation calculations. Thanks.
Okay I appreciate it thank you.
Yeah.
Hi, Jason we've had some sorry, yes, we've had some.
Online questions I'll pose.
From here.
When you when the starting with the first one there's a list of questions here. So.
Just starting with the first one.
Can you talk more about the intelligent energy solutions bidding this year and have we seen new bids with storage.
Coming up.
Yeah. So there is there is one a bit.
Bid that the government has announced for the storage.
And that is 100000 megawatt storage bid.
That they have.
Should be coming up for bidding fairly soon.
There are a number of states that have announced a stay.
And their own business well a far smaller in size. So we are seeing whether they want to participate in those but I would say that the.
Market for Standalone storage based is also likely to grow quite substantially and so apart from bidding for the state renewable energy projects will also be bidding for the battery project.
In addition to that the government is now also announced Baidu Babe.
Fairly significant build out plan for transmission infrastructure and that is something that we are also interested in looking at because they're very often tied into commissioning of a.
New renewable energy projects, so having control on the transmission infrastructure becomes fairly useful to have so we're looking at that.
Another opportunity so.
And it doesn't intelligent energy solutions also.
I think we May have said earlier, there was a two and a half gigawatt bid that happened last year that.
Had to be canceled for some bidding issues that is likely to get tended out again in the next couple of months time.
So that would be the first bid that will happen and then as I said the Indian Railways is looking at doing their own down the clock the intelligent edge solution based as well.
First I know that they're likely to come up with is going to be at least two gigawatt in size or thereabouts and keep in mind that each of these intelligent energy solution requires renewable energy, which is almost three times the capacity of the beta cells because they are they all require much higher plant load factors, so two and a half.
For example, which upon installation of almost 7% to eight gigawatts of actual renewable energy capacity of wind and solar. So these actually have some fairly large sizes tenders and these are all likely to be coming up in the initial few months of the next financial year, Let's say Q1, albeit about so I suspect that there'll be quite a few of these kinds of bid.
Flashing green hydrogen ultra that fed will require.
<unk> solutions, which also require more of a stability of Bubba and therefore also with.
Got it and then the distributions and as we see more of those requirements coming up those will all feed into the same combination of mainland solar and storage to optimize the overall cost. So I think we do.
Do believe that there'll be quite a number of such auction and bids that will be coming up.
Over the course of the next 12 months.
And then just if you could follow up with a little bit of color on what youre seeing in the corporate PPA market.
We have flagged this is a high return which makes sense for corporates.
Screen it lowers their costs.
Or do we seen or are we seeing more inquiries and when can we see a material pick up for this market.
Yeah, we're seeing a lot of I'm glad he's now and I think you've been working on this market for the last two years.
And you know in the beginning of this is our Greenville slight slow because.
It took a little bit of time to understand.
The regulatory.
Mental issues and what kind of solutions are possible and you know in different depending on where the customer is connected in terms of their power supply different kinds of solutions and depending on the state regulatory environment different kinds of solutions that can be structured for them and then you know the selling cycle has been fairly long, but you know as I said getting.
To the point, where they begin to convert more of these ppas and Nathan I'm not sure that you've announced.
<unk> Standalone.
How many corporate Ppas you've signed so so if you haven't been I I won't talk about that right now, but certainly it's something that will probably be coming out with at some point in the near future in terms of how many megawatts of Ppas we have converted.
But certainly we are seeing that the level of inquiries is quite good and.
Therefore, I think that the market is likely to grow.
As we go forward.
And hopefully over time, we'll be able to give some more tangible numbers about that.
Thank you so much just to change tack here and talk about the wind resource study can you give us an idea of how.
The numbers are trending relative to 20 year timeframe and.
What does what's the sensitivity to our EBITDA for everything.
1% change relative to normal over time.
Yes, Nathan I presume you've got questions from investors as opposed to somebody else.
Yeah.
Anyway, I was just putting the mix yeah as ads.
As.
You know what you've seen if you look at the last 20 year analysis for which we haven't measured actual win loss data in India.
We find that we'd.
Wind speeds have.
Degrees from.
The first decade after 'twenty two 2010 time period through the second decade of 2010 to 2020, there's been a reduction in into the body and when speed by about 9% or about 1%.
And that has approximately a 2% impact on the overall generation of wind projects. So you know, it's it's it's sort of within the band of statistically insignificant actually this 1% goes up which is why you know when the assessment companies don't really tend to factor in a decade old dropped.
In and when data.
Now, having said that we know that the last few years, particularly have been worse.
So if I factor in the last two years as well.
In the last 20 years, including the last few years, then that dropped actually increases strong about 0.78% to about 1%.
And so just a little bit over 1%. So that's really what the overall numbers has been and because the last two years have particularly.
So there've been bad and have have caused us to have this significant weather adjustment that is why we intend to now do a deeper dive into this whole issue.
And let me answer this.
You know tell everybody that the way we do our forecast is obviously based on satellite data of the last 30 years, then you put up in mass.
The major wind actually for at least a couple of years in that site, we triangulate that against the window the satellite data.
And we do our own internal assessment first then we go to a third party wind study complete like DNV GL on and off about a one of these.
Well known companies that do this globally.
And then will you be at either what the actual number should be and then.
As you all know is the Gulf of length lending our lenders also hire their own wind measurement company and get the numbers validated so bad on at least two independent third party companies that tend to look at all of the projects that we have done and so you know what.
Finally end up going with this I would sure sandy well analyzed and fairly well studied number.
Certainly not something that we just assign a number to ourselves and then we just go with that.
Now, having said that and despite that and despite the best efforts of everybody. We do know that the last few years have not been as good as the previous several years before that and that is why as I had mentioned earlier in the call at the end of this heightened season, which will finish in September we will use that data that would give us see than three years of data.
Of the last three years and even then.
The Commissioner rehired these agencies to do a full fledged studies now some of you would also know that globally onshore wind speeds have not been that good now whether this is sort of an aberration or whether this is a long term trend I don't think that anybody has a very very strong sort of handle a view on that so I think we've been studied this.
As I've said in more detail and we'll come to whatever is the best conclusion. They can come to we're not fixated in our view certainly we want to be as open and transparent on the tissue as possible because we want to arrive at the best answer.
If that merits for us to change our forecasting methodology in any way we.
We will do that.
So and you know, we'll we'll then make that adjustment because certainly we also don't want to continue to have a certain EBITDA number as a target and then reported a better adjusted number which is.
Different from that so we do want to get into alignment as we go forward. So we will put in our best efforts to study this topic in much more detail and arrive at the most scientific.
And analyzed our solution that we can come to.
And so not just if I can add to that point as well if you look at the sensitivity and put that into context.
Every one percentage point relative to normal its about $10 million.
Ongoing EBITDA so.
When talking about the kind of <unk>.
And scale of this.
Study at the end of the day, it's not likely to have a huge impact.
On our results, but we will have to do the studies to make sure.
Going to Dsos can you provide some medium term guidance on dsos, given the changing mix towards central and recent developments around implementing faster payments.
Yeah, So I can't give us specific to buy you know sort of a new medical number but I haven't tried to give some directional guidance.
So as all of you know as our portfolio shifts more and more towards secchi as I've I got off taker and out of the 10.2 gigawatt portfolio, 50% is with the off taker.
Dsos will naturally tend to trend downwards, because turkey on.
Second portfolio, we don't really see any delays at this point in time.
And so therefore, there is going to be a structural improvement in our Dsos just an account about one factor as we go forward because clearly as you go from 10 Gigawatts to 15 Gigawatts.
Most of the additional five will be.
Either safety or corporate off takers, which both tend to pay on time.
The existing capacity that you have directly with our state off takers, which is currently about five gigawatts that will then become a smaller part of our portfolio and therefore, the overall weighted impact average of that will come down. So that's point number one the second point is that.
There are four states in particular that accounted for the bulk of our receivables almost about 80% of our receivables and those are states that youre, obviously actively working on right now.
We've decided as we said earlier to go to court.
On enforcing the contracts that you have with these states for payments on time.
And wherever we are going to the courts, the parts out inevitably looming and a fever.
Such releasing all the guard from the state of Connecticut, and the state of Nevada, Australia, We're now in a third.
Court in the state of monetization.
And our fourth state in Telangana, which is one of the other states also has now been admitted forgetting so all debit so they're not all of these cases are going on in these cases ultimately as I said get ruled in our favor and that does.
And this comes they're not instructed to essentially pay us.
Over a period of time now what that leads us to is the fact that the <unk>, obviously don't have the capacity to pay immediately although now under contracts that they will have to and so therefore, we have to work out a bit of a payment mechanism on a payment online with them, which is something that they can then take to so that is really what.
You do after we win the court case and and and.
You have to agree on a certain timeline of payments over a few months. So that these people have the ability to make those payments happen. So I think over the course of the next several months you will see that in the balance sheet, but we don't have such a unique didn't even get those really and then the payments will begin to start.
And then hopefully.
Back on the existing Dsos will then begin to happen. So I think that is the second aspect.
Is that the central government is also putting pressure on the discounts are quite substantially as I've talked about many times earlier and Ah.
They have given a specific exemption to state governments that they will be allowed to borrow more than than usual boring limits.
Primarily to fund their discounts and so and so between that and preventing access of the discounts to the exchanges. They are trying to essentially persuaded this comes to become.
More current on their payments.
So that is also to some extent has been and the last point that I would say is the case of Andhra Pradesh on AP, which is a special kind of a case, where the case as we all know has been dragging on for a long time.
The hearings of the case concluded finally in the high court.
Earlier this month.
And we expect that by the end of next month.
<unk>, possibly know.
Now this is a ruling on a technical matter.
Julie could be appealing product and so it may take a little bit longer before.
That whole situation leads to a oh come.
Comes to a final conclusion.
So this is really where we are on the IP situation.
And so that is really the whole vehicles scenario right now I would say that structurally will have an improvement.
Some of the states, where there are significant overdue AR will have court rulings in our favor that would improve our payment situation and therefore guide the dsos downwards in EP has been a I would say that once that ruling comes out it.
It should be heading towards a speedier resolution alphabet, because then from that point on it would go to the Supreme Court if it if it does appear and they're usually relieves a faster.
So I would say that over the course of this year, we'll continue to see it.
Got it.
By the end of the year, a significant improvement, but that improvement will probably be gradual and spread out over the course of the next several months.
And so as you were answering that question I just got another one that comes in that's related and it's just about the risk of renegotiation.
That is possible.
Given the current environment.
No that is not at risk.
And it all in India, none of the <unk> is at this point.
Talking about renegotiating any contracts.
That said the only one that has that is and reputation that has been going on for the last two years. None of the other states has picked up on that or has chosen to take that particular.
That same approach forward and forget renegotiation of contracts parts are moving in our favor on late payment.
And so therefore, you know fairly well established case law on enforcement.
Enforcement of these.
These contracts, including.
Pulling the payment.
Let alone.
You know a renegotiation of the tariffs or anything so I think that's not something that is at all a possibility in the Indian contracts at this point.
And then finally.
On the final question.
Was relates to the electricity Act, which has been pushed out to the winter session in Parliament.
Do you see that playing contextual reforms focused on consumer tariffs as well as distribute as well as on the distribution side.
Yeah sure that's a nature to be I actually had a number of positive.
Proposals.
Including.
A stronger regulatory environment.
So on the government I think has chosen to not push that forward.
Push that forward in a slightly more water downbeat, but I think at the same time, what they are doing is that they're taking the different elements of this of the electricity Act and trying to push that through separately. So for example, the whole issue of having it.
National renewable purchase obligation trajectory.
<unk>, which was already contemplated in the act.
It's not something that the government is trying to push it separate from the act.
And diminish.
The Minister in fact in a recent conversation with people from the industry was seeing that there would be eventually in the future.
National IPO trajectory, which would then not give states the luxury or the freedom to have their own trajectory there would be one central Nashville predicted that all the states then have to tissue. So those kinds of things are happening.
And even outside of the <unk>. So I think look the reality is that the central government is very very supportive of our sector. They recognize that deeper electrification.
And the greening of the decarbonization of the electricity sector is absolutely fundamental to our meeting all our demand on electricity demands on energy demands in the future and the Lewis and the lowest cost manner possible. It is also consistent with the commitments that the prime Minister Laden Cop 26, and it also is.
Essentially an opportunity for the country to decrease our energy dependence.
We currently as you would know important almost $150 billion worth of fossil fuels every year, including cone important almost a $20 billion worth of coal and Reorders man.
So this is a bid that the government realizes is a way to cut dependence on the parts. We feel important. So there is that all branches of levels at the government very significant push forward.
Decarbonizing the entire entity.
Tune in India. So I think that is something that.
It underlines underlies a lot of the actions that the government has been taking in recent months and will continue to take in the future as well.
Yeah.
Thank you so much.
The end of our questions. We really appreciate everybody joining and please feel free to reach out to us.
My email is Nathan judge had renewable power.
And really appreciate everybody joining.
Yes.
Yes, thank you everybody.
That does conclude our conference.
For today thank.
Thank you for participating you may now disconnect.
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