Q4 2024 ReNew Energy Global PLC Earnings Call
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Thank you for standing by and welcome to the New energy cycle plc for Q FY 'twenty for adults and long term outlook.
Operator: Thank you for standing by, and welcome to Renew Energy Global PLC-4Q-FY24 Results in Long-Term Outlook. All participants are in listen-only mode.
Speaker Change: All participants are in listen only mode there'll be a presentation followed by a question and answer session. If you wish to ask a question you will need the question Starkey only by the number one on your telephone keypad I would now like to hand, the conference over to Mr. Nathan Judge. Please go ahead.
Operator: 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.
And thank you and good morning, everyone and thank you for joining us.
Nathan Judge: And thank you and good morning, everyone, and thank you for joining us. Today, we're going to have a little bit of a different format from our previous earnings call, given the meaningful gains the company has made in securing long-term growth, as well as the dramatic improvement in the fundamentals of the Indian renewable energy market. We wanted to share with you our long-term outlook in addition to the normal earnings review and annual guidance for fiscal year 2025.
Speaker Change: Today, we're gonna have a little bit of a different format from my previous earnings call given the meaningful gains. The company has made in securing long term growth as.
Speaker Change: As well as the dramatic improvement in the fundamentals of the Indian renewable energy market.
Speaker Change: We wanted to share with you our long term outlook. In addition to the normal earnings review and annual guidance for fiscal year 'twenty to 'twenty five.
Nathan Judge: We did put out a press release announcing results for the fiscal 2024 fourth quarter and full year 2024 ended March 31st, 2024, last night, and a copy of this press release and the earnings presentation are available in the investor relations section on Renew's website at www.renew.com. With me today are Sumant Sinha, Founder, Chairman, and CEO, Kailash Vaswani, our CFO, and Vaishali After the prepared remarks, which we expect will take about an hour, we will open the call for questions.
Speaker Change: We did put out a press release announcing results for the fiscal 2020 for fourth quarter and full year 2024 ended March 31.
Speaker Change: Before last night and a copy of this press release and earnings presentation are available on the Investor Relations section on renews website at Www Dot renew dotcom.
Speaker Change: With me today are <unk> founder Chairman and CEO.
Speaker Change: I'll ask Bret Swanson, our CFO, the Charlotte and.
Speaker Change: Oh, founder and chairperson of sustainability.
Speaker Change: After the repair after the prepared remarks.
Speaker Change: We expect it will take about an hour and will open.
Speaker Change: And up the call for questions.
Nathan Judge: Please note that our Safe Harbor statements are contained within our press release, presentation materials, and materials 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. Therefore, we encourage you to review the press release we filed in our Form 6K and the presentation on our website for a more complete description.
Speaker Change: Please note our safe Harbor statements are contained within our press release presents.
Speaker Change: Jason materials and materials available on our website.
Speaker Change: <unk> 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 and we encourage you to review the press release, we furnished in our form 6K.
Speaker Change: And the presentation on our website for a more complete description.
Speaker Change: Also contained in our press release presentation materials and annual report a certain non <unk> measures that we reconciled to the most comparable ISR S measures and these reconciliations are also available on our website and the press release presentation materials and our annual report he.
Nathan Judge: Also contained in our press release, presentation materials, and annual report are certain non-IFRS measures that we reconcile to the most possible IFRS measures, and these reconciliations are also available on our website in the press release, presentation materials, and our annual report. It is now my pleasure to hand it over to... Thank you, Nathan. Good morning, good afternoon, and good evening, everyone.
Speaker Change: It is now my pleasure to hand, it over to Simone.
Thank you Nathan.
Simone: Good morning.
Speaker Change: And good evening everyone.
Sumant Sinha: I'm glad to have you all on our earnings call. I'm turning now to the presentation. Just to talk about the first couple of pages, we are unwavering in our purpose of creating a carbon-free world, one step at a time. Our focus is on growth, and that adds value to all our stakeholders and, most importantly, to our shareholders. As a Renewable Energy Leader in India and the Global South, we aim to further enhance our position in the coming years. We don't pursue scale or market share for its own sake.
Simone: I'm glad to have you all in all let me just call.
Simone: Turning to the presentation.
Simone: Just to talk about the first couple of pages.
Simone: I'm really.
Simone: Purpose of creating a problem people one step at a time.
Simone: Focus is on <unk>.
Simone: That adds value to all our stakeholders and most importantly, well actually I don't know.
Simone: The renewable energy leader in India, and the global <unk>.
Simone: We aim to further enhance our position in the coming years.
Simone: We don't feel skin all market share on its own feet.
Sumant Sinha: Instead, we seek growth opportunities where the return exceeds our cost of production. Fiscal Year 2024 started off with a bang when the Ministry of New and Renewable Energy, or MNRE, announced 50 gigawatts of annual oxygen. This was almost triple what had been auctioned off the prior year.
Simone: Instead, we see growth opportunities, whether they can exceed I've also got.
Simone: Fiscal year 2024, it started off with a bang.
Speaker Change: You have new and renewable energy.
Speaker Change: <unk> announced 50 Gigawatts of annual auction.
Speaker Change: This was almost tripled once had been auctioned off the Tigers.
Sumant Sinha: Although the target was to achieve 50 gigawatts, India surpassed this goal, auctioning over 62 gigawatts of RE capacity during the year. Since April 2023, we have won about 8 GW of new capacity, which is around 60% more than our portfolio was as of March 31, 2023. We have signed PPAs for about 2.2 gigawatts of capacity so far in FY25, increasing our contracted portfolio now to 15.6 gigawatts for the remaining 6 gigawatts or so that we have done and have a letter of award in hand. We expect to sign more PPAs over the next six to nine months. Until then, we are going to refer to them as our pipeline.
Speaker Change: Although the target was to achieve 50, Gigawatts, India, So Boston School Akshay, what 62 Gigawatts up all you can get back with you during the year.
Speaker Change: April 2023, he had one about east gigawatt, so you'll get that because it all 60% more than a portfolio walls.
31 2023.
Speaker Change: We have signed Ppas off on about two gigawatts of capacity so far in FY 'twenty five.
Speaker Change: Using our contracted portfolio now to 15 six gigawatts.
Speaker Change: The remaining six six gigawatts of solar that we have won and having that kind of a woman had.
Speaker Change: We expect to sign Ppas over the next six to nine months.
Speaker Change: Until then we are going to refer to them as our pipeline.
Sumant Sinha: We are on pace to deliver on our pipeline of over 21 gigawatts by 2029, which is more than double the amount we finished fiscal year FY 2024 at. We are further propelled by a very exciting macroeconomic environment. We expect consistency in policymaking and a continued strong push towards renewable energy. On the demand side, we also anticipate a surge in industrial demand growth in sectors such as electric vehicles and data centers, which will not only boost GDP but also increase power demand substantially.
Speaker Change: We are on pace to deliver on that pipeline of about 21 Gigawatts by 2029.
Speaker Change: It is more than double the amount be finished fiscal year 2024.
Speaker Change: We have further propelled by a very exciting macroeconomic environment.
Speaker Change: We expect consistent field policymaking and a continued strong push towards renewable energy.
Speaker Change: On the demand side, we also anticipate a surge in industrial demand growth in factors, such as electric vehicles and data centers.
Speaker Change: Which will not only boost GDP, but also increased power demand substantially.
Speaker Change: On costs.
Sumant Sinha: Solar cell and module prices are at an all-time low, and battery prices have dropped by about a fourth in just over a year, helping to further improve the returns on projects under construction. The fiscal year ahead promises to be even more exciting and full of opportunities than the one that we just completed.
Speaker Change: So I'll, let Marty your taxes are at an all time low and battery prices have dropped by about a fault in just over a year.
Speaker Change: Helping to further improve their guns on projects under construction.
Speaker Change: The physical yellowhead promises to be even more exciting and full of opportunities.
Speaker Change: One that you just completed.
Speaker Change: On page seven in this call do you want to address some key items that we believe the market is mom checking right and given valued 40 gig.
Sumant Sinha: On page 7 of this call, we want to address some key items that we believe the market has not recognized and given value to yet. From where we sit today, we see a clear pathway to 16 to 18% annual growth through the end of this decade. Importantly, this growth will be through internal cash flow generation and asset recycling, and we do not intend to issue any new shares. We also expect to meaningfully improve our leverage ratios during this period.
Speaker Change: But where we sit today, we see a clear pathway to 16% to 18% and we will go to the end of this decade.
Speaker Change: Importantly, this growth will be through internal cash flow generation and asset recycling and we do not intend to issue any new shapes.
Speaker Change: Also we expect to meaningfully improve on everything they said during this period.
Speaker Change: As mentioned earlier.
Sumant Sinha: As mentioned earlier, our fully contracted portfolio stands at 15.6 gigawatts. However, we have also won an additional close to 6 gigawatts in a very favourable bidding market, for which we have letters of award in hand and expect to sign the PPS in the next 6 to 9 months. Combined, we have over 21 gigawatts, which provides clarity on growth as well as increased confidence in execution and return. Importantly, the next 10 gigawatts of growth have significantly higher returns than the 9.5 gigawatts we had operating as of March 31.
Speaker Change: <unk> contracted portfolio stands at 15 six gigawatts.
However, we have also won an additional close to six gigawatt in a very favorable bidding market for which we have letters of award in hand, and expect to sign the Ppas in the next six to nine months.
Speaker Change: Combined we have over 21, Gigawatts, which provides clarity on GUL as well as increased confidence on execution and the gun.
Speaker Change: Importantly, the next 10 Gigawatts of globe have significantly higher returns in the $9 five Gigawatts, we had operating as of March 31.
I said recycling is a key part of our strategy as it not only provides a lower cost of equity to fund growth.
Sumant Sinha: Asset recycling is a key part of our strategy as it not only provides a lower cost of equity to fund growth, but it also enhances returns given the meaningful premium we receive over billed costs. We can increase the IRR range to 20-25% on average after reinvestment of the equity and gains on sales. We expect to monetize around 2 gigawatts of assets by FY29. We also want to address some lack of clarity about our accounts.
Speaker Change: But it also enhances he's done.
Speaker Change: For premium we can achieve over build costs.
We can in D. C. I thought we'd do 20% to 25% on average after reinvestment of the equity and gains on sales.
We expect to monetize that I'm, two gigawatts of assets by FY 'twenty nine.
Speaker Change: We also want to address some lack of clarity about out of column puts.
Sumant Sinha: Put simply, there is a significant amount of investment and cost that we will incur in the near term, such as debt and unalleviable overheads for our platform. However, they create significant comparative advantages and are key to long-term value creation. We will provide some analysis that shows that for our assets operational for over a year, those earn a healthy ROCE or return on capital employed of around 11% versus about 8% at the consolidated level.
Speaker Change: Put simply it is a significant amount of investment and cost that'd be really good in the near term such as data and analytics.
Speaker Change: For our platform.
Speaker Change: However, they create significant competitive advantages and a key to long term value creation.
Speaker Change: You can provide some analysis that shows that put out assets to offer the extent from or what are you.
Speaker Change: Doors on a healthy Odyssey.
Speaker Change: Have you done in capital employed of around 11% versus about 8% at the consolidated level.
Sumant Sinha: We contribute about Rs. 17 billion as CFE compared to our FY24 consolidated CFE of Rs. 13.7 billion.
Speaker Change: Contribute about 17 billion rupees.
Speaker Change: S C S E.
Speaker Change: Compared to our if I can just talk consolidated Cfe after 18 7 billion rupees.
Sumant Sinha: And these assets only have a net debt to LTM EBITDA ratio of 5.3 times versus 8.2 times at a consolidated level. All of these are meaningfully better than the ratios that would be calculated from our consolidated account. As we continue to grow through this decade and more of our assets become operational, the consolidated account ratio will improve materially. Turning to... and Kailash will talk about some of these numbers later on.
Speaker Change: And these assets only have a net debt to LTM EBITDA ratio of five three times what it is eight two times at a consolidated level.
Speaker Change: All of these are meaningfully better than the issues that would be calculated from our consolidated accounts.
Speaker Change: As we continue to grow.
Speaker Change: Through this decade.
Speaker Change: And more of our Athens became all become operational the consolidated account ratio will improve markedly.
Speaker Change: Turning to page and can I ask you to talk about some of these numbers may go on.
Speaker Change: Turning to page eight since on this thing about three years ago.
Sumant Sinha: Turning to page 8, since our listing about 3 years ago... We have delivered about 18 to 19% annual growth in operating megawatts, as well as adjusted EBITDA. With the projects under construction, recently signed contracts, and recent wins that we expect to receive contracts in this fiscal year, we believe we can deliver 16-18% growth in adjusted EBITDA for the remainder of this decade.
Speaker Change: We have delivered about 18% to 19% annual growth in operating megawatts as well as adjusted EBITDA.
Speaker Change: With the projects under construction or recently signed contract and recently that we expect to receive contract in this fiscal year.
Speaker Change: We believe we can deliver 16% to 18% growth in.
Adjusted EBITDA for the remainder of this decade.
Speaker Change: We haven't mentioned them the technology our.
Sumant Sinha: We have invested in the technology, our people, and in building a platform that can deliver truly at scale. Our EBITDA growth is outpacing the growth of our operating megawatts and indicates that we expect to improve our margins. Even though we are making investments to accelerate growth and future growth.
Speaker Change: People and then building a platform that can deliver truly at scale.
Speaker Change: Our EBITDA growth is outpacing the growth of our operating megawatts.
Speaker Change: And indicates that we expect to improve our margin.
Speaker Change: Even though we are making investments to accelerate growth in future years.
Speaker Change: We anticipate that our current pipeline, which includes about six gigawatts of Uncontacted auction being built.
Sumant Sinha: We anticipate that our current pipeline, which includes about 6 gigawatts of uncontracted auction wins, will generate approximately... INR 142 to 150 billion rupees in EBITDA by the end of this decade, once fully operational. This will be over two times the FY24 numbers we just reported and close to three and a half times growth since our IPO. Turning to page 9.
Speaker Change: It will generate approximately.
INR 142 to 150 billion will be in EBITDA by the end of this decade once fully operational.
Speaker Change: This will be over two times of the FY 'twenty one numbers, we just reported.
Speaker Change: And close to three and a half times since.
Speaker Change: Since our IPO.
Speaker Change: Turning to page nine.
Speaker Change: As part of our commitment to create shareholder value.
Sumant Sinha: As part of our commitment to create shareholder value, we will continue to pursue the lowest cost capital to fund our growth, about 1.5 to 2 gigawatts of assets on our own with our cash flow to equity without needing to raise equity or recycle capital. What this means is that we can achieve about 17 to 18 gigawatts of operational capacity by FY29 without needing additional equity. However, we have observed that our differentiated development capability is at a premium, both in the bidding market, where we are seeing returns above recent historical norms, as well as in premiums to book value being offered for our assets.
Speaker Change: We'll continue to pursue the lowest cost capital to fund our growth.
Speaker Change: We can sell fund.
About one five to two gigawatts of assets in a room.
Speaker Change: With our cash flow to equity.
Speaker Change: Without needing to raise equity or recycled capital.
Speaker Change: What this means is that.
Speaker Change: We can achieve about 17 to 18 gigawatts of operational capacity by FY 'twenty nine without needing additional equity.
Speaker Change: However, we have observed that our differentiated developed capability is at a premium Balkan the bidding market, where we're seeing the tons above recent historical norms as well as at premiums to book value being offered for that asset.
Sumant Sinha: Therefore, we are pursuing a plan to accelerate our growth by building an additional 500 megawatts to a gigawatt each year, which will be funded by asset resizing. This edition is likely to have an exponential growth effect on our CSE and will have a higher growth trajectory as we add capacity. Through recycling, we can build over 19 gigawatts by selling 1.5 to 2 gigawatts and 2.5 gigawatts of assets at 2 times book value, which would equate to around 9.5 times EV to run rate EBITDA. We emphasize our strategy to fund growth through capital recycling. This is important.
Speaker Change: Therefore, we are pursuing a plan to accelerate our growth by building an additional 500 megawatts to one gigawatt each year, there shouldn't be funded by I should be thinking.
Speaker Change: This condition is likely to have an exponentially grow to think cfe.
Speaker Change: And we'll have a higher growth trajectory as we add capacity.
Speaker Change: Two recycling if he can build over 19 gigawatt by selling one and a half to two gigawatts two gigawatts of method two.
Speaker Change: Two times book value, which would equate to about nine and a half times EV to EBITDA.
Speaker Change: We emphasize that our strategy to fund growth through capital recycling.
Sumant Sinha: Not only does it provide a much lower cost of equity than issuing shares, but it also enhances the expected ILRs meaningfully after reinvestment, on page 10. We aim to demonstrate that our projects, once stable and fully operational, are profitable. While Kailash will cover this topic in more detail soon, let me share some key highlights.
Speaker Change: This is important not only does it provide a much lower cost of equity then you should be checked. It also enhances the expected dialogues meaningfully after reinvestment.
Speaker Change: On page 10.
Speaker Change: We aim to demonstrate that our project one stable and fully up in Houston.
Speaker Change: Escobar.
Speaker Change: Well I'll tell actually covered this topic in more detail. So let me share some key highlights.
Speaker Change: We started this fiscal year with seven six gigawatts of additional assets.
Sumant Sinha: We started this fiscal year with 7.6 gigawatts of operational assets, excluding the 400 megawatts we sold during the year, which delivered an adjusted EBITDA of about INR 63 billion in FY24. The net debt to LTM EBITDA ratio for these projects was about 5.48, and the return on invested capital was around 11%. And these assets deliver a stable CFE of about 17 billion rupees. Turning to page 11. I'm through with this.
Speaker Change: Excluding the 400 megawatts to be sold during the year.
Speaker Change: Which delivered an adjusted EBITDA.
Speaker Change: Off of about INR 63 billion in FY 'twenty four.
Speaker Change: The net debt to LTM EBITDA ratio for these projects was about 5.4 legs.
Speaker Change: And the return on invested capital was around 11%.
Speaker Change: And these assets delivered a stable cfe.
Speaker Change: <unk> 17 billion rupees.
Speaker Change: Turning to page 11.
Speaker Change: Our growth estimates.
Sumant Sinha: We aim to grow our EBITDA by 16-18% annually over the next 5 years to about INR 142-150 billion on a run rate adjusted EBITDA in FY30. Additionally, once operational, our 19.4 GW should deliver approximately INR 35-42 billion in CSE, which would be an annual growth of over 25% per annum. We expect a return on capital employed between 11-12% for the consolidated results.
Speaker Change: We aim to grow out EBITDA by 16% to 18% annually over the next five years.
Speaker Change: About INR 142 to 150 billion honestly on a run rate adjusted EBITDA and if I could be.
Speaker Change: Additionally, once our policemen on $19 four gigawatt should deliver approximately INR 35 to 42 billion N C. A T.
Speaker Change: Which would be an annual growth of over 25%.
Speaker Change: But isn't it.
Speaker Change: We expect that had gone on capital employed between 11% to 12% for the consolidated results.
Sumant Sinha: We are also mindful of our overall leverage levels and will look to improve the consolidated leverage net debt to EBITDA ratio by about 25% from current levels as well. For FY25, we expect EBITDA of INR 76 to 82 billion and to operationalize 1,900 to 2,400 megawatts of new products. In addition, we also expect to deliver CFE of INR 12 to 14 billion, which would be about 30% growth after adjusting for the gain on sale we recognized in FY24.
Speaker Change: Also mindful of our overall leverage levels and we'll look to improve the consolidated leverage net debt to EBITDA ratio by about 25% from current levels as well.
Speaker Change: Well, if I had 25, we expect EBITDA of INR 76 to 82 billion.
Speaker Change: And to Operationalize 1000, 902400 megawatts of new projects.
Speaker Change: In addition, we also expect to deliver.
Speaker Change: F E of INR 12 to 14 billion, which would be about 30% growth after adjusting for the gain on C. N recognized in FY 'twenty four.
On page 12, we reaffirm our commitment to pursuing only the highest return opportunities that we can deliver returns above the cost of capital.
Sumant Sinha: On page 12, we reaffirm our commitment to pursuing only the highest return opportunities where we can deliver returns above the cost of capital. The Return on Capital Employed for projects commissioned in FY23, which are now delivering stable EBITDA, is around 11%, compared to a weighted average cost of capital of around 8.75 to 9.25%. Additionally, our in-house wind EPC and ONM capabilities, combined with digital capabilities, empower us to engage in firm power or complex projects that have the highest return and constitute the fastest-growing segment of the market.
Speaker Change: The return on capital employed for project commissioning their cyclical suites.
Speaker Change: Now delivering steam.
Cable EBITDA is around 11%.
Speaker Change: Compared to our weighted average cost of capital of around $8, 75% to 9.25%.
Additionally, our in house when E P C.
Speaker Change: Oh, and then capabilities combined with digital capabilities empower us to engage in film Paula are complex projects.
Speaker Change: That have the highest you've done and constitute the fastest growing segment of the market.
Speaker Change: Over the years, we have partnered with both dominant domestic and international investors, who have shown interest in our assets and provided us with equity for growth.
Sumant Sinha: Over the years, we have partnered with both prominent domestic and international investors who have shown interest in our assets and provided us with equity for growth. This strategy has allowed us to achieve a higher return on invested capital, along with lowering our overall lending.
Speaker Change: This strategy has allowed us to achieve a higher return on invested capital along with lowering our overall leverage.
Speaker Change: Now turning to the highlights for the quarter and full year 2020 full on Batesville team.
Sumant Sinha: Now turning to the highlights for the quarter and full year 2024 on page 14, I am pleased to report that for FY24, we reported our first profitable year since listing, a significant milestone showcasing our inherent CAD generation capability. Furthermore, our EBITDA was at the top end of the range for EBITDA and ahead of CFPB. We added 1.9 gigawatts of operational capacity in line with projections and, excluding the impact of gains from asset sales, reported an adjusted EBITDA of INR 65.6 billion compared to the top end of our initial EBITDA guidance range of INR 66 billion. Additionally, we exceeded our CSE guidance, reporting INR 13.7 billion, which includes an INR 3.7 billion gain from sales.
Speaker Change: I am pleased to the board that for FY 'twenty four.
Speaker Change: We reported our first profitable year simplicity.
Speaker Change: A significant milestone so getting out of debt and cash generation capabilities.
Speaker Change: The mall of EBIT that was at the top end of the Beach club.
Speaker Change: For EBITDA and ahead and Cfe.
Speaker Change: We added one nine gigawatt of operational capacity in line litigation and excluding the impact of gain from sale of assets is reported on an adjusted EBITDA of INR $65 6 billion.
Speaker Change: Compared to the top end of our initial EBITDA guidance range of INR 66 billion.
Speaker Change: Additionally, we exceeded our cfe guidance reporting INR $13 7 billion.
Speaker Change: We can close them and that $3 7 billion gain from pillar.
Speaker Change: We are also reporting our first profitable fiscal year since listing.
Sumant Sinha: We are also reporting our first profitable fiscal year since lifting, with a profit of INR 4.1 billion or USD 0.12 in EPS. Our contracted portfolio now stands at an impressive 15.6 GW, including the 2.2 GW of recently signed agreements. Turning to page 16.
Speaker Change: The profit of lineup opened 1 billion already lived on up 12 cents of EPS.
Speaker Change: Our contracted portfolio now stands at an impressive 15, six gigawatts, including the two two gigawatts of recently signed agreements.
Speaker Change: Turning to page 16.
Speaker Change: We have a summary of our bid some of our businesses.
Sumant Sinha: We have a summary of updates from our business. Firstly, the current renewable energy landscape is one of the best we have ever seen with over 62 gigawatts of options in FY24 and more than 50 gigawatts additional already in the pipeline for FY25. In addition, high power demand has pushed merchant prices up, which is driving higher auction tariffs as well. Demand for electricity is at an all-time high.
Speaker Change: Firstly.
Speaker Change: The columns renewable energy landscape is one of the best we have ever seen.
Speaker Change: Six two gigawatts of Walsh, indemnified plentiful and more than 50, Gigawatts. Additionally, already in the pipeline for FY 'twenty five.
Speaker Change: In addition high power demand has supposed to merchant prices up.
Speaker Change: This is driving higher auction dinos is right.
Speaker Change: The demand for electricity is at an all time high.
Speaker Change: Secondly, our differentiated platform positions us as a leader in foreign policy and complex projects leveraging.
Speaker Change: Our capability to combine wind development.
Speaker Change: And digital capabilities.
Speaker Change: There are fewer takers of these firms are complex projects given the challenges in execution.
Speaker Change: And hence we see higher return opportunities and these kinds of projects.
Speaker Change: Finally, our returns are bolstered by the decline in solar module in some cases alongside a significant reduction in battery prices.
Speaker Change: On page 18.
Sumant Sinha: Secondly, our differentiated platform positions us as a leader in firm power and complex projects, leveraging our capability to combine wind development with our digital capability. There are fewer takers of these firm power or complex projects given the challenges in execution, and hence we see higher return opportunities in these kinds of projects. Finally, our returns are bolstered by the decline in solar module and cell prices, alongside a significant reduction in batching prices. On page 18, let me first delve into the auction market. This has been one of the best auction markets we have seen since our inception.
Speaker Change: Let me first delve into the auction market.
Speaker Change: This has been one of the best auction market you've seen since our inception.
Speaker Change: There was an almost fourfold increase in the audio auction during fiscal year, FY 'twenty fall compared to fiscal year 2022.
Sumant Sinha: There was an over four-fold increase in RE auctions during fiscal year FY24 compared to fiscal year 2023, and another 50 gigawatts has already been announced and should be completed in the current fiscal year. The share of firm power projects grew the most, with over 23 gigawatts auctioned in FY24. While the overall market has grown, for sure, we notice that the subscription rate, which is a measure of competition levels, is generally lower.
Speaker Change: And another 50 Gigawatts has already been announced and should be completed in the current fiscal year.
Speaker Change: The shadow from pharma projects grew the most read over 23 Gigawatts auction in FY 'twenty four.
Speaker Change: While the overall market has grown Michelle we noticed that the subscription rate, which is a measure of competition levels.
Speaker Change: Generally law.
Sumant Sinha: Particularly in the firm power of a complex project of... Although there are enough takers for vanilla, wind, and solar projects, some of the more complex projects saw less than a one-time subscription. We expect this trend to continue due to the limited capital, bandwidth, project size under development, and resources among our peers, and therefore, we should see lower competition and hence possibly better returns. Turning to page 19.
Speaker Change: Particularly in the first power at the complex project auctions.
Speaker Change: Although there are enough takers for when they loved wind and solar projects from the more complex car they saw less than one time subscription.
Speaker Change: We expect this trend to continue due to the limited capital bandwidth.
Speaker Change: Project sites under development.
Speaker Change: Andrew sources, among our peers.
Speaker Change: And therefore, we should see more competition.
Speaker Change: And possibly better returns.
Speaker Change: Turning to page 19.
Sumant Sinha: India's FY 24 GDP grew by 8.2% year on year, surpassing estimates, thanks to this GDP growth and the expansion in purchasing power of the Indian consumer. We see a consistent rise in power demand, which has also risen around 8% on average over the past four years. Notably, despite a rapid expansion in power consumption, India still has one of the lowest per capita electricity consumption rates in the world. India's peak demand hit two new highs in May of this year, and with that came outages and spikes in merchant power prices as well as regulatory caps.
Speaker Change: India's FY 'twenty five GDP grew by eight 2% year on year.
Speaker Change: Third party estimates.
Speaker Change: Turning to the GDP growth and expansion of purchasing power of the Indian consumer.
Speaker Change: We see a consistent rising power demand.
Speaker Change: Which is also a reason at all.
Speaker Change: On average over the past four years.
Speaker Change: Notably despite this rapid expansion in public consumption, India still has one of the lowest per capita electricity consumption.
Speaker Change: In the world.
Speaker Change: On page 20.
Speaker Change: India speak demand it to new highs in may of this year and with that gain outages and spikes in merchant power prices as well as regulatory cats.
Sumant Sinha: Evidence that demand is our facing supply. Despite this high demand, supply will take time to catch up, including that of renewable energy, the fastest and cheapest solution. With the likelihood of continued shortages and an upswing in the average merchant prices and lower competition in auctions, it is reasonable to expect auction tariffs will also continue to rise in the medium term, on page 21.
Speaker Change: Evidence that demand is outpacing supply.
Speaker Change: Despite this high demand supply will take time to catch up.
Speaker Change: Including that as renewable energy, the fastest and cheapest solution.
Speaker Change: With the likelihood of continued shortages.
Speaker Change: An upswing in the average merchant pricing and loan competition in auction. It is reasonable to expect oxygen that it will also continue to rise in the medium term.
Speaker Change: On page 21.
Sumant Sinha: Due to an increase in power demand and with the mandate to reach its 2030 targets of 500 gigawatts of installed RD capacity, MNRE, the Ministry of New and Renewable Energy, initiated a 50 gigawatt RE auction target last year, appointing four different agencies to bid out this capacity. These agencies, along with the state distribution companies, have surpassed the overall target in the first year, auctioning over 62 gigawatts of renewable energy capacity, nearly a fourfold increase over the last several years and the most ever. We are tracking another 50 gigawatts of capacity that have been announced for Fi25.
Speaker Change: Due to an increase in borrower demand and with the mandate to reach its 2030 targets of 500 gigawatts of installed capacity.
Speaker Change: And then I read the ministry of new and renewable energy.
Speaker Change: She ended up 50 gigawatt audio auction target last year.
Speaker Change: I think for different agents used to build out this catastrophe.
Speaker Change: These agencies along with the state distribution companies have surpassed the overall target in the first year Auctioning Olympics to two gigawatts of renewable energy capacity nearly a fourfold increase over the last couple years and the most stable.
Speaker Change: We are tracking to another 50 gigawatts of auctions that have been announced for the FY 'twenty five.
Sumant Sinha: Notably, the amount of firm power complexes or complexes, with, as I said earlier, about 23 gigawatts of firm power capacity auctioned during the year and around 9.5 gigawatts already announced for financial year 20. Given our differentiated capabilities, we have been able to capture more of these higher return projects than others. We capitalized on the expansion in auction volume by winning about 8 gigawatts of RE capacity in a single year. This was nearly 60% of our contracted capacity at the beginning of fiscal year 24. Of this 8 gigawatts, we have signed TPAs for about 1.8 gigawatts and another 438 megawatt agreement with a single corporate customer in India. Turning to page 22.
Speaker Change: Notably the amount of firm pollen complex are complex.
Speaker Change: Capacity has seen the largest season from an FY 'twenty photo of what FY 'twenty.
Speaker Change: As I said earlier about 23 gigawatts of firm forward capacity auction during the year and around nine five gigawatts already announced for financial year 'twenty five.
Speaker Change: Given our differentiated capabilities, we have been able to capture more of these high return projects went up yes.
Speaker Change: We capitalized on the expansion in auction volume by winning about eight gigawatts of adding capacity in a single year.
Speaker Change: This was nearly 60% of our contracted capacity at the beginning of fiscal year 'twenty four.
Speaker Change: Obviously once we have signed Ppas for about 1.8, Gigawatts and another 400 megawatt agreement with a single corporate customer.
Speaker Change: Of these eight gigawatts over 512 Gigawatts of phone blah blah blah.
Speaker Change: It should have a highly gun and Cleveland.
Speaker Change: Turning to page 22.
Sumant Sinha: The total addressable market has expanded, but there is limited capability and bandwidth amongst peers for these firm power or complex projects. Most competitors, aside from the top three or four, have struggled to keep up with the rapid increase in auctions, resulting in lower competition as evidenced by falling subscription rates.
The total addressable market has expanded but there is limited capability in bandwidth amongst peers.
Speaker Change: These phone powered on complex projects.
Speaker Change: Most competitors aside from the top three or four have struggled to keep up with the rapid increase in auctions.
Speaker Change: Resulting in more competition.
Speaker Change: As evidenced by falling subscription rates.
Speaker Change: So when the lobbying Susan and hybrid auctions.
Sumant Sinha: The Vanilla Wind, Solar, and Hybrid auctions have had over-subscription rates of 2.8 to 3 times, whereas some firm power projects have been less than one time subscribed. Limited factors such as capital, scale, and capability contribute to this trend. But our key differentiator is our in-house wind EPCT. We have been investing in developing a strong platform that can deliver large-scale projects at the lowest cost. Our in-house wind EPC and solar EPC and land acquisition teams ensure seamless delivery on this front.
Speaker Change: Had to subscription nature coupon day to three times that had some phone power projects have been less than one times subscribed.
Speaker Change: Limiting factors such as capital scheme and capability contribute to this thing, but that's a key differentiator is that in house when D. P. C P.
Speaker Change: We have been investing and developing a strong platform that can deliver large scale projects at the lowest cost.
Speaker Change: Uh huh.
Speaker Change: D P C and D C and land acquisition to eat into a seamless delivery on this shrunk.
Turning to page 24, which further outlines our differentiated platform and the ability for film power complex topics.
Sumant Sinha: Turning to page 24, which further outlines our differentiated platform and ability for firm power complexes for business. Our wind EPC expertise, bundled with our digital capabilities, provides us with an edge in firm power complex projects. We can deliver these projects at the lowest cost in India and achieve superior returns, which are better than vanilla projects. Our portfolio, combined with our pipeline of over 21 gigawatts, includes now around 1 gigawatt of firm power projects, or about a third of our total projects under construction and in the pipeline.
Speaker Change: I'll wind EPC expertise bundle without digital capabilities provides us with an edge in some part of complex topics.
Speaker Change: Can deliver these products that are at the lowest cost in India and it used to be there to gun, which are better than vanilla project.
Speaker Change: I've portfolio combined with our pipeline off of what 'twenty, one gigawatt, including all of that.
Speaker Change: Gigawatts a phone problem.
Speaker Change: At about a third of our total projects under construction and in the pipeline.
Sumant Sinha: Competition in this segment, as I said earlier, is low, and our enhanced physical lab further enhances return through determination of the optimal mix of wind, solar, and battery. Our ability, therefore, to manage Wind EPC and our digital platform enables us to achieve superior returns in this segment of the market. In addition, I should say that we now participate only in central bids as the counterparty profiles enable us to source cheaper financing.
Speaker Change: Competition in this segment as I said earlier is low.
Speaker Change: And our in house digital that further enhances their done to determination of the optimal mix of wind solar and batteries.
Speaker Change: Our ability therefore to managing will be P. C.
Speaker Change: Our digital platform enables us to achieve superior returns in this segment of the market.
Speaker Change: In addition, I should say that Piedmont participate only in central bid as a counterparty profile enabled us to source cheaper financing and photo we now only take on corporate Ppas are at least 50 megawatts there.
Sumant Sinha: And further, we now only take on corporate PTAs of at least 50 megawatts with mostly now marquee international customers. We invest our capital in the highest return opportunities, and currently, firm power projects provide that advantage. Turning to page 26.
Speaker Change: Mostly now monkey international customers.
Speaker Change: We invest our capital in the highest return opportunities and currently from Baba projects provide that Avenue.
Speaker Change: Turning to page 26.
Speaker Change: We have the largest wind UPC developer in India.
Sumant Sinha: We are the largest wind EPC developer in India, with over 4.7 gigawatts of operational wind projects, and our nearest competitor is only about half of our size. Since our inception, India has added about 29 gigawatts of wind capacity, with 4.7 gigawatts contributed by us or almost 17% of the total as a market share. Build projects are complex due to design intricacies and the lead time of site selection. Fragmented Nature of Science, and, very importantly, right-of-way-related matters.
Speaker Change: Almost four seven gigawatts of operational wind projects.
Speaker Change: And I'll be honest comparator is only about half of our site.
Speaker Change: Since our inception.
Speaker Change: India has added about 29 gigawatts of wind catastrophe.
Speaker Change: Which ballpark seven gigawatts contributed by us or almost 17% of the total AR as our market share for us.
Speaker Change: When projects are complex due to design and took the seat.
Speaker Change: Lead time off site selection.
Speaker Change: Fragmented nature of the site.
Very importantly, <unk> related matters.
Speaker Change: Despite these challenges wind has the Louis L. P O E four peak demand even better than solar.
Sumant Sinha: Despite these challenges, wind has the lowest LCOE for peak demand, even better than solar. That may sound odd as, in India, peak demand is during 6 to 8 a.m. in the morning and 7 to 9 p.m. in the evening, times when solar is really not generated. Our decade of experience and data from over 2,200 wind turbines enables us to optimize bidding models and select the best sites for upcoming projects, providing us with a significant comparative advantage.
Speaker Change: That may sound odd as normally big demand in the U S or Europe is during the day.
Speaker Change: In India.
Speaker Change: Demand is unique six to eight in the morning, and seven to nine P. M in the evening.
Speaker Change: Solar is really not generating.
Our decades of experience and data from over 1200 wind turbines.
Enables us to optimize bidding model and select the best sites for upcoming projects.
Speaker Change: Writing us with significant competitive advantages.
Speaker Change: For them, we have realized that we are able to better manage operational projects and we have found that we maintain projects ourselves at a 25% to 30% lower cost than they've outsourced to audience.
Sumant Sinha: Further, we have realized that we are able to better manage operational projects, and we have found that we maintain projects ourselves at a 25 to 30% lower cost than if they were outsourced to OEMs. It also allows us to actually generate higher uptime and generation from the wind turbines that we manage ourselves. We will continue, therefore, to focus on enhancing our wind capabilities and growing this capability by developing more strong power projects. Turning to page 27.
Speaker Change: It also allows us to actually generate higher uptime and generation from the wind turbines that we manage ourselves.
Speaker Change: We will conclude therefore, the focus on enhancing our capabilities and grosses capability by developing more pump projects.
Speaker Change: Turning to page 27.
Speaker Change: The combination of wind solar and battery storage is the best renewable energy solution for phone calls.
Sumant Sinha: The combination of wind, solar, and battery storage is the best renewable energy solution for firm power, particularly compared to solar with pumped hydro alternately. Wind is a much more cost-effective solution than pumped hydro for meeting demand when solar is not produced. Solar and Batteries. We produce the cheapest form of power from renewable energy in the country. Our analysis concludes that the overall cost of pumped hydro plus solar is still 10-15% higher than what we can produce with wind plus solar and batteries. Moreover, PHP sites are limited and have lead times of over 3-5 years.
Speaker Change: Particularly compared to solar bit pumped hydro ultimate days.
Speaker Change: Wind is a much more cost effective solution than pumped hydro for meeting demand meant so let us not producing.
Speaker Change: With a combination of wind.
Speaker Change: And batteries.
Speaker Change: [laughter] reproduce the cheapest form power from renewable energy in the country.
Speaker Change: Our analysis.
Speaker Change: <unk> got the overall cost of pumped hydro flask sawmill is still 10% to 15% higher cost than what we can produce with wind.
Speaker Change: Solar and batteries.
Speaker Change: Moreover, ph D sites are limited and have lead times of about three to five years.
Sumant Sinha: Making it challenging to deliver electricity in 18-24 months, as required by the PTA's terms. For batteries, the fall in prices has ensured that the cost of using batteries as a solid solution is far more economical than it was before, and with the likely continued improvement in technology for batteries and reduction in cost, this shift toward wind and solar power and batteries is likely to continue to take place in the future as well. Turning to page 28.
Speaker Change: Making it challenging to deliver it makes us it would be in the 18 to 24 months as required by the P. P. S films.
Speaker Change: But if a battery is the fall in prices has ensured that the cost of using batteries a solid solution is far more economical than it was before and the likely continued improvement in technology for batteries and reduction in costs. This shift towards wind and solar and batteries is likely to continue to.
Speaker Change: Take place in the future this mess.
Speaker Change: Yeah.
Speaker Change: Turning to page 28.
Sumant Sinha: Our digital capabilities provide us with a unique advantage. Our digital lab is able to use complex simulations through triangulation of proprietary data from our over 2,200 wind turbines across the country, 16,000 solar inverters, and 150 windmills. Because of this in-depth analysis, our digital engines can do predictive modeling, as well as do backward testing of our models.
Speaker Change: Digital capabilities provide us with a unique advantage our digital lab is able to use complex simulation through triangulation of proprietary data from our 2200 does winter lines across all of the country.
Speaker Change: Our 16000, plus we're getting real good and 150 plus windmills.
Speaker Change: To this in depth analysis, our digital engines can do predictive modeling.
Speaker Change: As well as due back what they're thinking of our models.
Sumant Sinha: This enables us to bid more effectively in auctions, achieve higher tariffs, and reduce execution rates. Additionally, we can minimize battery use and rely more on wind and solar production, which are cheaper sources of capacity. Our digital capabilities enable real-time monitoring of plant performance.
Speaker Change: Allowing us to bid more effectively and auction achieved.
But you've hired goddess and reduce execution.
Speaker Change: Additionally, we can minimize battery use and rely more on wind and solar production without cheaper sources of capacity to our digital and analysis.
Speaker Change: On digital Kippy capabilities enable real time monitoring of plant performance.
Sumant Sinha: Optimizing delivery with minimal downtime. We therefore view our digital systems as a significant competitive edge, as there is even greater demand for complex power solutions going forward. Furthermore, Renew is also the only renewable energy company to have received the prestigious Global Lighthouse Award by the World Economic Forum, and we have received this award not just once, but twice. Turning to page 31.
Speaker Change: <unk> deliveries with minimal downtime.
Speaker Change: We therefore view our digital systems as a significant competitive edge as there is even greater demand for complex powered solutions going forward.
Speaker Change: Separately. The new is also the only renewable energy company to have received the prestigious Global Lighthouse award by the World Economic Forum and we have received this award not just one but twice.
Speaker Change: Turning to page could be wrong.
Speaker Change: Access to transmission interconnection is also critical to ensure on time deliveries are for power projects.
Sumant Sinha: Access to transmission interconnection is also critical to ensure on-band delivery for power projects. Our efforts to secure access to connectivity for future project growth start years in advance, utilizing our proprietary data and local expertise to identify the upcoming substations in a region where we can get the highest PLFs or plant load factors by minimizing transmission line addition. Most interconnection access in India has already been allocated through till Fiscal Year 2027-28. Put differently, if you wanted to bid in the auction market today,
Speaker Change: It starts with secure access to connectivity for future project go to stop years in advance.
Speaker Change: Utilizing our proprietary data and local expertise.
Speaker Change: Despite the upcoming Substations in a region, where you can get the highest pls or plant load factors, while minimizing transmission line conditions.
Speaker Change: Most interconnection access in India.
Speaker Change: Has already been allocated through till fiscal year, 2020 seven 'twenty eight.
Speaker Change: Put differently, if you wanted to bid in the auction market today.
Sumant Sinha: Your project would likely not be able to get access to the grid until FY28, in a comparative PLF location. By seeing this bottleneck, we have secured access to over 10 gigawatts of connectivity beyond our operational project. We have visibility of interconnection access for not only our projects under construction but also for our 5.6 gigawatts of uncontracted pipes. We actively secure access to interconnection hubs or acquire land where hubs are expected to be built, ensuring our projects can be... Connected Once fully built.
Speaker Change: Your project would likely not be able to get access to the grid.
Speaker Change: Until FY 'twenty eight.
Speaker Change: In competitive.
Speaker Change: S locations.
Speaker Change: Foreseeing. This bottleneck, we have secured access to over 10 gigawatts of connectivity beyond doubt operational projects.
Speaker Change: We have visibility of interconnection access for not only us.
Speaker Change: Someday consumption, but also for a 5.6 gigawatts up I'm contracted pipeline.
Speaker Change: The activity secured access to interconnection hubs or acquire language hubs that are expected to be built and sharing our projects can be.
Speaker Change: Connected once fully built in.
Sumant Sinha: In addition, having this clarity of interconnection and site development provides us greater confidence while bidding. It also allows us to be more comparable if we have blocked more comparable PLF sites than our competitors. Our in-house project development teams ensure that we are ahead of competitors in securing land, transmission, and interconnection for the bids that we carry out in the future. And this is actually what helps us also get higher IRRs on our projects compared to our competitors. Turning to page 32.
Speaker Change: In addition, having the clarity of interconnection and site development provides us with confidence while bidding.
Speaker Change: It also allows us to be more competitive if he had blocked more competitive.
Speaker Change: P L S sites, they're not competitors.
Speaker Change: Our in house product development teams ensure that we are ahead of competitors in securing land transmission and interconnection for the basics that we carry out in the future and this is actually what helps US also get the higher IRR than a project as compared to our competitors.
Speaker Change: Turning to page 32.
Speaker Change: In terms of it comes in a project.
Sumant Sinha: One of the most critical factors impacting returns is cost. In the past year, solar module and cell prices, which represent 40 to 50% of a solar project cost, have fallen by over 50% or more, which has resulted in over $100 million worth of capital savings in fiscal year 2021. When looking at our CAPEX forecasts, do note that we have assumed higher module prices than the current spot price. If we do indeed realize the current spot price over the next 4-5 years, our total solar module capex will be about 15-20% lower than projected.
Speaker Change: One of the most critical factors impacting return its cost.
Speaker Change: In the past year solar module and cell prices, which represents 42 50 per cent office windows, but it costs have fallen by almost 50% of malls because it does give them over $100 million worth of Capex savings on fiscal year 'twenty four.
Speaker Change: We're looking at a capex woke up do know that he has assumed the higher module prices and the current spot prices.
Speaker Change: If you do indeed realize cut them spot prices over the next four or five years.
Speaker Change: Total solar module capex would be about 15% to 20% door than our prediction battery prices have also fallen significantly as well and as I said the trend continues to be downwards for batteries is that.
Sumant Sinha: Battery prices have also fallen significantly as well, and as I said, the trend continues to be downwards for batteries as well. Turning to page 33, supply chain challenges, especially in solar, remain prevalent in India. The implementation of the ALMM, or the Approved List of Modules and Manufacturers, in April this year has restricted most of the imports of modules into India.
Speaker Change: Turning to page 33.
Speaker Change: Supply chain challenges, especially in solo remain prevalent in India.
Speaker Change: Implementation of the N and M. All the approved list of modules and manufacturers in April this year has restricted most of the imports of modules into India.
Sumant Sinha: To provide a solution to ensure security of supply, we now have our own manufacturing facilities which are currently producing modules at costs lower than imports, after including import duties, even where imports are possible in a very restricted sense, and, of course, in future projects, that are not even possible. While India has about 35 gigawatts of capacity, much of it is old, higher-cost technology or is exported or caters to rooftop and smaller module requirements.
Speaker Change: To provide a solution to ensure security of supply we now have our own manufacturing facilities, which are currently producing mortgages that golf's northern impulse after including important duties, even that imports are possible in the innovative restricted sense.
Speaker Change: And of course, the future projects that do not even possible.
Speaker Change: While India has about 35 gigawatts of capacity much I figured all higher cost technology.
Speaker Change: Autos exported all caters to a rooftop and the smaller modules Islam them, leaving only about 12 gigawatts of supply well. This is a much higher domestic demand.
Sumant Sinha: Leading only about 12 gigawatts of supply versus a much higher domestic demand, we are transitioning to Topcon technology which is at least 2-3% more efficient than existing monoprice technology to further increase our cost advantages over our Indian peers. We are interested, over time, in monetizing a portion or even all of our solar manufacturing plants as part of our capital recycling strategy, securing, of course, the supply to our own plants. Our assumptions while bidding include buffers over the spot prices for sales, and this helps insulate us from a possible uptick in prices come execution time. Turning to page 34.
Speaker Change: We are transitioning to talk on technology, but you get used to the people and more efficient than existing mono PERC technology to further improve our cost advantages over that Indian peers.
The unadjusted overtime and monetizing a portion or even all of our solar manufacturing plant as part of our capital recycling strategy.
So getting the cost of supply to our own plants.
Speaker Change: Our assumptions like bidding include buffers over the spot prices for cells.
Speaker Change: And this helps insulate us from a possible uptick in prices some execution problems.
Speaker Change: Turning to page 34.
Speaker Change: Interest cost is our biggest annual expense over the past year, we have ensured that we just see all the refinance debt is loved by refinancing all high cost debt as well as by shifting to cheaper domestic financing.
Sumant Sinha: Interest cost is our biggest annual expense. Over the past year, we have ensured that the interest rate of refinanced debt is lowered by refinancing old high-cost debt as well as by shifting to cheaper domestic financing. Both international and domestic lenders continue to show a lot of interest in our project, and domestic debt liquidity is at a high. We have signed over $13 billion worth of debt funding MOUs in a single year with very high-quality counterparties such as the Asian Development Bank, Société Générale, Power Finance Corporation, and others.
Speaker Change: Both international and domestic lenders continue to show a lot of interest in our project.
Speaker Change: And the domestic debt liquidity at a high.
Speaker Change: We have signed over $13 billion worth of debt funding Mou in a single year, but very high quality counterparties, such as the Asian development Bank Societe Generale.
Speaker Change: And Buffon Ensco operation and obviously.
Speaker Change: Additionally, Indian banks are now more open to renewable energy projects and are not only offering competitive films, but also larger check sizes in lined with the larger auction and project sizes I came up with.
Sumant Sinha: Additionally, Indian banks are now more open to renewable energy projects and are not only offering competitive terms but also larger cheque sizes in line with the larger auctions and project sizes that we are now doing. We have no immediate refinancing risk, and we continue to be prudent in our approach to ensure that we can optimize our costs through tapping a varied pool of capital. With that, let me hand it over to Kailash to discuss more about the financing strategy. Kailash, it's over to you.
Speaker Change: We had no immediate refinancing risk and we continue to be prudent in our approach to ensure that we can optimize our costs to tapping a very there is pool of capital.
collage: With that let me hand, it over to collage to discuss more about the financing side and I'll share with you.
Speaker Change: Oh, Thanks, a month.
Kailash Vaswani: Thanks a lot. On page 36, we'll discuss three themes, profitability, leverage, and funding growth, where we'll showcase the returns from our operating projects, analyze the leverage of our operating portfolio, and outline our growth funding strategy. Firstly, turning to profitability and leverage. On slide 37, based on reported financials, some may view our leverage high and profits low. However, these ratios are distorted by growth, including debt for projects that are not yet completed and producing EBITDA, as well as the costs related to our platform that delivers tremendous value over the long term.
Speaker Change: On page 36, we will discuss these teens profitability.
collage: Leverage and funding goes well then we'll showcase the returns from our operating project analyze the leverage of our operating portfolio and outline our growth funding strategy, firstly, turning to profitability and leverage on slide 37 based on reported financials. Some may view, our leverage high and profit flow.
Kailash Vaswani: We will show on the slide that leverage on assets in our portfolio that have been operating for at least one year only has a net debt to last 12 month EBITDA ratio of about 5.3 times. The ROCE, or the return on capital employed, of the same group is around 11%.
Kailash Vaswani: On a consolidated basis, the returns of these projects are partially offset by platform costs, new businesses, and our under-construction portfolio. Put differently, as we grow, there will be systematic improvement in leverage and profitability. By 2030, we expect that the consolidated net debt to last 12 months' EBITDA will be around 5.5 times or lower, and overall return on capital employed will be double-digit. On page 38, we delve into leverage. The operational portfolio of assets that have been operating for one year or more had a net debt to last 12-month EBITDA leverage ratio of around 5.5 times, while the same ratio on a consolidated basis stood at 8.2 times.
Kailash Vaswani: We want to point out that this higher figure includes debt related to manufacturing, equity contributions by our JV partners in the form of compulsorily convertible debt, and debt related to our under-construction portfolio. After these adjustments, our underlying co-leverage ratio is about 5.5. On page 39, let me...
collage: These ratios are distorted by growth, including digital projects that are that are not yet completed and producing EBITDA.
collage: As well as the costs related to our platform that delivers tremendous value longer term.
collage: As shown on the slide that leverage all the assets in our portfolio that had been operating for at least one year only have a net debt to last 12 months EBITDA ratio of about $5 three times the IOC what the return on capital employed of the same group is around 11% on a consolidated basis the returns.
collage: These projects are partially offset by platform costs, new businesses and are under construction portfolio.
collage: Differently as they grow they will be systematic improvement leveraging profitability by 2030, we expect that the consolidated net debt to last 12 months EBITDA will be around five five times or lower and overall return on capital employed will be double digits.
collage: On page 38, we delve into leverage the operating portfolio of assets that have been operating one year or more at a net debt to last 12 month EBITDA leverage ratio of around five five times, while at the same ratio on a consolidated basis. So that 8.2 times do you want to point out that this big highest thing though.
collage: And towards that related to manufacturing equity contributions by our JV partners and that's why almost comfortably convertible debt and debt related to AR and the construction portfolio. After these adjustments our underlying core leverage ratio is at both pipelines lifetimes.
Kailash Vaswani: On page 39, let me follow up on Sumant's discussion of funding our growth. Our internal cash flow to equity generation can fund about 2 gigawatts per annum of capacity additions. Adding this up through FY29, we can reach about 17 gigawatts without additional equity. However, the auction market is particularly robust right now, offering some of the highest returns we have ever seen.
Speaker Change: On page 39 lets me.
collage: Yeah.
Speaker Change: Sorry on page 39, let me follow up on two months discussion I'll find me outgrows, our internal cash flow to work with each generation can find about two gigawatts per annum of.
Capacity additions, adding this up to a 529 weekend each about 17 gigawatt without additional equity however, the auction market, particularly robust right now offering some of the highest returns we have ever seen.
Kailash Vaswani: In addition, given the shortages of development capability combined with strong ESG mandates by global investors, we are able to monetize assets at a premium. This asset recycling opportunity allows us to accelerate our growth without issuing new shares. We address our funding requirements and sources. We need approximately US dollars 8 billion in CapEx to build out our 21.4 gigawatt committed portfolio and pipe. We plan to fund our equity needs through a mix of asset sales, cash on the balance sheet, and internal cash generation.
Speaker Change: In addition, given the shortages of development capability combined with strong ESG mandates like Goldman and Webster, we are able to monetize assets at a premium.
Speaker Change: Asset recycling opportunity allows us to accelerate our growth without issuing new shares.
Speaker Change: Turning to page 14.
Speaker Change: We address our funding requirements and sources, we need approximate be U S dollars 8 billion in Capex to build out 'twenty, one four gigawatts contracted portfolio and pipeline, we plan to fund our equity needs through a mix of asset sales cash on balance sheet and internal cash generation and for debt requirements, we have multiple options available.
Kailash Vaswani: And for debt requirements, we have multiple options available, including the MOUs that we've signed with PLC, REC, the Asian Development Bank, and Society in General. Now, let's turn to our financial performance. On slide 41, we reported our first profitable year since listing, a significant milestone showcasing our platform's inherent cash-generating capability.
Speaker Change: Including the Mou that we signed with PFC Odyssey, you shouldn't development Bank and society in General.
Speaker Change: Now, let's turn to our financial performance on Slide 41, we reported our first profitable year. Since this thing a significant milestone showcasing our platform's inherent cash generating capacity capability.
Kailash Vaswani: The number of megawatts we brought online was in the middle of the initial FY 2024 guidance, while EBITDA came in at the top range, top of the range, and the cash flow to equity was slightly higher than the top end of the guidance provided, even after including the 3.7 billion gain on assets. On page 42, our contracted portfolio now stands at 15.6 gigawatts with 2.2 gigawatt of contracts just recently signed. We have an operational capacity of 9.5 gigawatts, having added 1.9 gigawatts during the year.
Speaker Change: The number of megawatts, we brought online was in the middle of the initial FY 2020 full guidance, while EBITDA came in at the top range on top of the range and the Gaslog wake with Dean was slightly higher than the top end of the guidance. So I did even after excluding the $3 7 billion gain on ethics.
On page 42, our contracted portfolio now stands at 15, six gigawatt with 2.2 gigawatt of contracts. Just recently signed we have an operation operational capacity of 9.5 gigawatt, having added one nine gigawatt during the year.
Kailash Vaswani: Note that we sold around 200 megawatts during FY 2024, which are no longer included in our portfolio. Of the 1.9 gigawatts added, 1,174 megawatt is solar, and 768 megawatt is wind. We saw significant improvement in wind PLF, reaching 26.4 percent compared to 25.5 percent last year. Solar PLF was slightly lower, mainly due to cyclones on the west coast of India early last year. Overall, there was about a 3 billion negative impact of weather in 2024 versus that long-term 20-year average.
Speaker Change: Note that we sold around 200 megawatts Julien FY 2024, which are no longer included in our portfolio of tier one nine gigawatt added 1174 megawatts of solar and 768 megawatt is weight based.
Speaker Change: The significant improvement in wood pellet, reaching 26, 4% compared to 25 point Cypress and talk to you soon.
Speaker Change: This was slightly lower mainly due to cycles on the west coast of India early last year.
Speaker Change: Overall, there was about a 3 billion negative impact of weather in 2020 for voice is that long term 20 year averages.
Kailash Vaswani: On page 43, we showcase our cash generation. While not a gap metric, cash profits demonstrate renewed strong cash generation for equity investment. During FY 2024, we reported a cash growth rate of INR 26 billion; this marked an 83% increase from the previous. On page 44, we emphasize our strategy to fund growth through capital recycling. We have raised about $645 million by selling close to 20% of our assets at an approximate two times price to price. This equates to almost nine to nine and a half times EV to run rate EPIT.
Speaker Change: On page 21 page 43, we showcase our cash innovation, while not a gasometric cash office demonstrate renewed strong cash generation for equity invested.
Speaker Change: During FY 2020, full we reported a cash profit of INR 26 billion. This market, 83% increase from the previous year.
Speaker Change: On page 44, we emphasize our strategy to find growth to capital recycling, we have raised about $645 million by selling close to 20% of our assets at an approximate two times price to book This equates to almost 919, all things easy to run rate EBITDA.
Kailash Vaswani: This strategy allows us to build assets at lower EBITDA multiples of around seven to seven and a half times and sell them at higher multiples, thereby realizing equity gains for faster growth. This equity is reinvested into projects, providing even higher EBITDA on our invested capital by one and a half to two times. Capital Recycling also improves return on invested capital.
Speaker Change: This strategy allows us to bring assets at launch but not much.
Speaker Change: Sales of around 7% to seven and a half times and sell them at higher multiples, thereby realizing equity gains for faster growth.
Speaker Change: It will be reinvested into project, providing even higher any brenda on Uninvested capital T. By one turn off the two times approximately <unk>.
Speaker Change: Capital recycling also improves returns meaningfully based on our track record of selling about 20% of the company I talked about around 99 times EV to run rate EBITDA is a range of expected.
Kailash Vaswani: Based on our track record of selling about 20% of the company at around 9 to 9.5 times EV200 EBITDA, the range of expected IRRs improved by 20 to 25% versus our base case. We will continue to maximize the opportunity to recycle assets and use the slower cost of equity for growth. And we will be disciplined in ensuring that we only access the cheapest source of capital without over-leveraging our balance. On page 45, are days to say the letter says outstanding has improved substantially and now stands at around 77 days of receivables on billed revenue, a 61-day improvement here on YouTube.
Speaker Change: Grew by 20% to 25% versus our base case.
We will continue to maximize the opportunity to recycle assets and use of lower cost of equity for growth with discipline and ensuring that the only access the cheapest source of capital T without or leveraging our balance sheet.
Speaker Change: On page 45 advanced to phase out there just sounds outstanding.
Speaker Change: Has it grew substantially and now stand at around 77 days of receivables Unbilled revenue of 61 day improvement year on year.
Kailash Vaswani: We are making good progress on overdue receivables with the state and expect DSO stability once these issues are resolved. The Government of India has taken initiatives to streamline recovery through its National Power Portal. Tracking Overdue States, and Overdue Dates from States
Speaker Change: We are making good progress on overdue receivables with the feed and expect the Dsos stability. One these issues of it solved the government of India has taken initiatives to streamline with Tony towards National Power 40.
Speaker Change: Tracking audio seats audio days from states.
Kailash Vaswani: This payment security mechanism has improved our working capital over the period. With that, let me hand it over to Vaishali for comments on ESG. Thank you, Kailash.
Speaker Change: This payment security mechanism has improved our working capital T orthopedic yet.
Speaker Change: With that let me hand, it over to Charlie for comments on ESG.
Speaker Change: Yeah.
Kayla: Thank you Kayla.
Vaishali Nigam Sinha: Turning to page 47, as we reflect on the remarkable milestones achieved during fiscal year 24, our journey has been marked by achieving our targets and being recognized by top-rated ESG rating platforms, affirming our leadership globally. We set new benchmarks in our ESG vision, performance, and transparency, which I will elaborate on in the upcoming slides. Renew has been recognized by top ESG rating platforms, including being named among the top rated ESG companies by Sustainalytics and the best in India's electric utilities and IPPs corporate in India by Refinance. Our dedication to sustainability is further demonstrated by the increase in our S&P global score, which has gone up to 55 in fiscal year 2023 from 41 in fiscal year 2022. We have maintained our B score in CDP climate change and A- in CDP supply engagement rate.
Speaker Change: Turning to page 47.
Speaker Change: We reflect on the remarkable milestones achieved during fiscal year 'twenty for our journey has been marked by achieving our target.
Speaker Change: Being recognized by top rated ESG ratings that fun affirming our leadership globally.
Speaker Change: Set new benchmarks in our ESG vision apartments, and transparency beside them elaborate in the upcoming slides.
Speaker Change: And you have been recognized by Kaki incubation platforms building, England amount appropriated, yes, you're comfortable by sustainability and passing them yet.
Speaker Change: I think the corporate.
Speaker Change: India by that.
Speaker Change: Our dedication to sustainability is further demonstrated by the increase in F N b.
Speaker Change: It's gone up to 55 are in fiscal year 'twenty two from what he bonding fiscal year 'twenty two.
Speaker Change: We have maintained our east core in CDP climate change and E E.
Speaker Change: We supply.
Speaker Change: Last year, when you received global recognition for its fine living achievement.
Vaishali Nigam Sinha: Last year, Renew received global recognition for its pioneering achievements in business excellence, digital innovation, and sustainability. Among the most notable accolades were the MIT Technology Review's 2023's 15 Climate Tech Companies to Watch For. Renew was included in this, and it was one of the only two renewable energy companies globally to be included in this prestigious list.
Speaker Change: Excellent.
Speaker Change: Digital innovation and sustainability among the most notable uplift well M. I <unk> technology, the 2022 U S companies.
Speaker Change: Companies to watch for.
Speaker Change: Okay.
Speaker Change: Honestly I don't the only thought.
Speaker Change: Then she companies globally could be included in that he just made.
Speaker Change:
Vaishali Nigam Sinha: In the Sustainable Markets Initiative Terracotta Team, we were one of the 17 companies on a global list that was recognized for its efforts towards conservation of water and its operations. The COP28 Presidency Energy Transition Changemaker award was an award that was given to us by the COP28 Presidency. We were the only green energy company from India to be recognized under the category of renewables, integration, and clean power, and renewables as well. The World Economic Forum's Global Lighthouse Network, we won this for the second time, and we found our place in a select list of 21 members of the Global Lighthouse Network, a community of manufacturers that show leadership in the fourth industrial revolution technology.
In the sustainable market initiatives that I'll call back to you.
Speaker Change: Veeva violence to 17 companies in a globally. This is recognized for its effort to what confirmation of Walker and myself operation.
Speaker Change: The clock Clinton presidency, and Congress can change make up what's an award given to us by the clock 28 that N C D. But the only thing that made you comfortable from India could be recognized under the tactically.
Speaker Change: Renewables integration.
Speaker Change: Power.
Speaker Change: I'm thinking about it is that.
Speaker Change: The well economics for our global Lighthouse network. All we want is for the second time honestly from a select list of 'twenty five 'twenty one member of the global Lighthouse network.
Speaker Change: Our community of manufacturers that show leadership and talking that through technology.
Vaishali Nigam Sinha: These accolades underscore our commitment to settling, to setting new benchmarks in ESG vision, performance, and transparency. Since inception, social responsibility has been central to our business strategy at Renew. Our CSR journey, which began in 2014, and since then, our impact footprint has grown to about 500 plus villages across 10 plus states in India, impacting the lives of over 1 million people.
Speaker Change: Exactly underscore our commitment to settling.
Speaker Change: A new benchmark unless division performance.
Speaker Change: Since inception, our social responsibility has been central to our business strategy at colonial I can't start journey, which began in 2014.
They're not in fact footprint has grown to about 500 class villages across 10 o'clock P. M.
Speaker Change: In fact, the lives of over 1 million people Nokia up even in what is a very prestigious CIO of ITC to save them for making a lot of our CSR.
Vaishali Nigam Sinha: Last year, we were awarded the very prestigious CII IDC Sustainability Award in the CSR category, recognizing our robust processes and consistent impact across our operations around India. Turning to page 48, I would now like to switch to the specifics of some of our efforts for fiscal year 2024. Some of the flagship programs that we've been working on are, one is Lighting Light, which is an initiative focusing on last-mile electrification of government schools with less than three hours of electricity and putting renewable energy sources for electricity in these schools and advocating for climate action. We have electrified 63 schools and established 66 digital learning centers across five states.
Speaker Change: Recognizing our robust processes and consistent in fact across our operation around India.
Speaker Change: Turning to page 14, I would now like to switch to set something up our effort.
Speaker Change: T O.
Speaker Change: Some of the flagship programs everything doing work on one light light.
Speaker Change: Just focusing on last mile electrification of government schools, but less than three hours of electricity.
And God, putting renewable energy sources for electricity in the school and advocating for climate action, we have electrified excuse me who.
Speaker Change: Or was that an established.
Speaker Change: Digital learning centers.
Speaker Change: Across five feet.
Vaishali Nigam Sinha: Women for Climate is a very important initiative where we are addressing the gap of women's participation in the energy sector through skilling and entrepreneurship development for rural and urban women. We have trained over 300 salt pan farmers as solar technicians and helped them secure jobs for more than 30 percent of the trainees. With respect to our site, Renew does a lot of work actively, and a lot of the programs are employee-driven as well.
Speaker Change: All women for climate is a very important initiative that we are addressing the gap of the loan participations.
So it's feeling an entrepreneur Sip development for rural and urban women Yep.
Speaker Change: We have seen Oh, what's the hungry for Sun pharma I'll call. It a question on Hudson yards, so for more than 40% of the thing.
Speaker Change: With respect to our site the new there's a lot of work actively on a lot of the programs I'm sorry.
Vaishali Nigam Sinha: In addition to developing social infrastructure for the communities, our employee engagement initiatives foster a culture of giving and care within the Renew network of sites. For example, we have provided safe drinking water by building 170 water tanks, desilting 18 lakes, and installing over 100 reverse osmosis units across communities and schools.
Hello, there seems like there's all sorts of things.
Speaker Change: For the communities are employing aikman, who wants to go cross sell culture of giving them care for them to have a more a network.
Speaker Change: Hum.
Speaker Change: We have provided keep thinking walk up by building a hunting waterfalls, a destocking eating me I'm, calling over 100, a rework all smokeless unit across communities and schools.
Vaishali Nigam Sinha: Our app, Renew Sustainability, is really about advancing our communities year on year and taking the disclosures to the next level. With that in mind, the release of our first integrated support plan and assurance of our ESG data is underway. Now, let me hand it back to Sumant to talk about our guidance. Thank you, Vaishali.
Speaker Change: I see no sustainability really about advancing our communities here in Europe, taking a good disclosure to the next level.
In mind doesn't need a hotspot.
Speaker Change: And assure yourself on E. S. P data is underway.
Sumant Sinha: Turning to our annual guidance on page 50, for FY25, we expect an adjusted EBITDA of INR 76 billion to INR 82 billion and expect to complete 1.9 gigawatts to 2.4 gigawatts of projects this year. The addition of these projects will enable us to deliver a CSE of INR 12 to 14 billion in FY25. In addition, we expect that our current contracted pipeline will deliver INR 110 to INR 115 billion on a run rate consolidated basis and CSE of INR 30 to 32 billion.
Speaker Change: I'll hand, it back to Martin to talk about our guidance.
Michelle: [noise]. Thank you Michelle.
Turning to our annual guidance on page 54 of FY 'twenty five we expect an adjusted EBITDA of <unk>.
Martin: And 76 billion to INR 82 billion and expect to complete one nine gigawatts to two four gigawatts of projects this year.
Martin: The addition of these projects will enable us to deliver a C. S E.
Martin: Our 12 to 14 billion in FY 'twenty five.
Martin: In addition, we expect that our current contracted pipeline will deliver a INR 110.
Martin: $815 billion on a run.
Martin: Run rate consolidated basis, and Cfe of INR 32 32 billion.
Martin: On a longer term basis, we expect that we should be able to deliver the full 21, four gigawatt portfolio plus pipeline by the year 2029.
Martin: 'twenty 'twenty nine and reached a run rate guidance by 530 on a fully constructed run rate basis after considering planned acid. Besides me.
Martin: Should be able to deliver EBITDA of INR 142 to 150 billion and our Cfe of INR 35 to 42 billion tankage.
Sumant Sinha: On a longer-term basis, we expect that we should be able to deliver the full 21.4 gigawatt portfolio plus pipeline by the year 2029, FY 2029, and reach the run rate guidance by FY 30. On a fully constructed run rate basis, after considering planned acid recycling, we should be able to deliver EBITDA of INR 142 to 150 billion and a CSE of INR 35 to 42 billion. Thank you so much for all your patience and giving us time to go through this presentation.
Speaker Change: Thank you so much for all your patience and giving us.
Speaker Change #100: I'm trying to.
Speaker Change #100: To go through this presentation.
Sumant Sinha: We will now be happy to take any questions from you all. Thank you. Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
Speaker Change #101: We will be now happy to take any questions.
Speaker Change #101: Yes.
Speaker Change #102: Nathan banking.
Speaker Change #103: If you wish to ask a question. Please press star one on your telephone and might be your name to be announced.
Speaker Change #103: If you wish to cancel your request. Please press star two if you're on a speakerphone. Please pick up the handset to ask your question.
Operator: If you're on a speaker phone, please pick up the handset to ask your question. Your first question comes from Justin Clare with Roth Capital Partners. Yeah, hi.
Speaker Change #103: Your first question comes from Justin Clare with Roth Capital Partners.
Justin Lars Clare: Yeah, Hi, thanks for taking our questions here.
Justin Lars Clare: Thanks for taking our questions here. So, first off, you have 21.4 gigawatts that you've won at auction already, and so just thinking through the interconnection constraints here, you know, how are you thinking about participating in new auctions, you know, in FY25 and beyond, given the, you know, size of the pipeline that you already have? Are you looking to participate?
Speaker Change #105: So first off you know you have 21, four gigawatt that you've wanted auction already.
Speaker Change #106: And so just thinking through the interconnection constraints here you know how are you thinking about participating in new auctions in FY 'twenty five and beyond given the size of the pipeline that you you already have you know are you looking to participate.
Sumant Sinha: And then if so, are you looking at winning projects where the COD dates would be in, you know, FY30 or potentially beyond? So how are you thinking about that part of the equation? Yeah, so I think, Justin, as far as your question of interconnected concerns, you know, to build for a new project, you obviously need both the interconnect and also reasonable visibility on how you're going to get the lag or the ability to block the lag.
Speaker Change #106: And then if so are you looking at winning projects, where the C. O D dates would be in F Y 30 or potentially beyond so how are you thinking about that part of the business.
Justin Lars Clare: Yeah, So I think Justin as far as your question on interconnect us informed.
Speaker Change #107: No two big part of your projected need obviously, both the interconnect and also the the reasonable visibility on how you're gonna forget the lab all the ability to block the lab.
Sumant Sinha: So this is that, and then the PLF, we make an assessment of where you can bid from with a high degree of certainty that you'll eventually be able to do the project. Now, the better, and you can block interconnection through a couple of different mechanisms. You can acquire land ahead of time, and that allows you to block interconnect, or you can give a bank guarantee and block interconnect, but if you do the latter, then you have to get the land within a few months after that, otherwise you can lose your VVS.
Speaker Change #107: So basically that and then the the BNS mpls.
Speaker Change #107: Then to a lesser delineation you make an assessment of Oh, you know welcome you bid for them with a high degree of certainty that you'll eventually be able to do the plug itself now the better and you can block interconnect to a couple of different mechanisms. You can acquire land ahead of time and that allows you to block interconnect.
Speaker Change #107: Oh, you can give a bank guarantee and walk into the mix, but if you do the second then you have to get the land within a few months possible otherwise you can use your BD as well.
Sumant Sinha: So on the basis of this, what we are looking at doing is constantly looking forward and blocking interconnected areas where we know which are good sites, and the better the fight you can get, the more comparative you are in office. Simply because if you have got better locations than other people have, then obviously you are able to make higher returns at the same tariff compared to other people.
Speaker Change #107: So basically this is what we're looking at doing is constantly looking forward and blocky interconnecting the areas, where we know it's a good space.
Speaker Change #107: And the better sites you can get.
Speaker Change #107: The more competitive you are in auction.
Speaker Change #107: Simply because you have got better location. When other people have then obviously you are able to make high return at the same status compared to other people. So therefore, the project development becomes very crucial and actually maximizing on the returns off the projects that we're bidding for and so at any given point in time, we are extending out.
Sumant Sinha: So, therefore, project development becomes very crucial in actually maximizing the return on the projects that we are bidding for. And so, at any given point in time, we are extending out. This whole project development by anything from 4 to 6 gigawatts beyond what we already have in terms of the pipeline of projects, which is in the space of 21.4 gigawatts. So we have therefore many other sites and interconnect areas that we already are holding right now and through which we will now build some new projects.
Speaker Change #107: This whole project development by everything from 46, Gigawatts beyond what we already have in terms of pipeline of projects, which isn't this is 21 central visuals.
Speaker Change #107: We have therefore, many other sites are connected to us that the LDR holding right now and to which even now before you pass it now to your question off. These good probably is going to be beyond 2030.
Sumant Sinha: Now to your question of whether these projects are going to be beyond 2030. That is something that we will assess as we go forward, because obviously, we want to make sure that we stay within the cash availability that we have, and therefore, we will bid for projects on a very, very selective basis from this point on, and to the extent that we can make those projects back-ended during this time period, we will likely do that.
Speaker Change #107: That is something that we will assess as we go forward because obviously, we want to make sure that we stay within the cash availability that we have and therefore, we will bid on a very very selected basis from this point to them and to the extent that we can make those plug ins back ended during this time.
Speaker Change #108: Peter you would like to do that.
Sumant Sinha: So that we are able to manage the capital requirement. And we will continue to build, but as I said, on a very selective basis for projects where we can get even higher hours. That is the media thinking, by the way.
Speaker Change #109: So they've been able to manage the capital requirement that space and we will come through the bid, but I know as I said on a very select basis popular Vicksburg, where we can get even hired all of us.
Speaker Change #109: So that is a deliberate thinking about it.
Speaker Change #109: Yeah.
Speaker Change #110: Got it okay, that's really helpful.
Sumant Sinha: Okay, that's really helpful. And then maybe just one on your guidance here: you expect to complete 1.9 to 2.4 gigawatts by the end of fiscal 25. I was wondering, you know, how much of that capacity is expected to be commissioned versus how much will be operational but not yet commissioned. So it does look like there's a gap between when you operationalize a project and when it actually gets commissioned. How much is that gap? And then considering that, I was wondering, you know, how significant are merchant project sales in your fiscal 25 guidance? Okay.
Speaker Change #111: And then maybe just one on your guidance. Your you expect to complete a one nine to 2.4 gigawatts by the end of fiscal 'twenty five.
Speaker Change #112: Wondering how much of that capacity is expected to be commissioned versus.
Speaker Change #113: Versus how much will be operational but not yet commissioned so it does look like there's.
Speaker Change #114: There's a gap between when you operationalize a project and when it actually gets commissions you know how much is that gap and then considering that was wondering you know how significant or merchant project sales in your fiscal 'twenty guidance.
Speaker Change #114: Okay.
Sumant Sinha: So, you know, the reason that there was a gap this last year between projects that started generating revenues and projects that were technically deemed to be commissioned is because of two reasons. One, the grid operator introduced new guidelines and rules that required a much higher stringency of the connections that we had into the grid in terms of, you know, they wanted us to do various trial runs and, and grid, you know, matching and all of those kinds of things, which actually, on a one-time basis, delayed all commissioning of projects while they went through this new set of rules and regulations.
Speaker Change #115: You know the reason that there was a gap this lockstep with your project.
Speaker Change #115: Other generating revenues and project that but technically deemed to be commission.
Speaker Change #115: It's because of two reasons one.
Speaker Change #115: The grid, operator introduced new guidelines and rules that require a much higher stringency of off of the of the connections that we had into the goods are in terms of you know they wanted us to do with its dry runs and and grade.
Speaker Change #115: Matching and all of those kinds of things, which actually on a one time basis in a we believe all the commissioning of projects rather than through this new set of rules and regulations now that that is well known.
Sumant Sinha: Now that that is well known and well understood, it is something that the whole system, not just us but also the system operator, are now able to sort of buckle down and start minimizing the timeline between the revenue generation as well as the commissioning. So as we go forward, that gap will keep narrowing in India. Okay, but to be honest with you, it matters less to us because once the project starts generating revenue, that's really the important thing from our standpoint.
Speaker Change #115: And then understood. It is something that the whole system not just us but also the system. Operator are now able to sort of buckled down and stops are minimizing the timeline between the between the.
Speaker Change #115: But in the medium duty as well as the commission. Okay. So as we go forward that you have to keep them out of it.
Speaker Change #115: Last year that said the gap was a little larger because of the fact that all these with a new distributor already able to start working a little bit more efficiency on these issues and stopped factoring with them. So I can't tell you exactly when it will be by the end of this year, but the guy can be a lot of metal.
But to be honest with you it matters less to us because.
Speaker Change #115: Once the project starts at any revenue that's really the important thing from our standpoint.
Sumant Sinha: The second thing is that the moment the project is deemed technically commissioned, we then have to start selling it under the PPA at the end discount, whereas when it is, you know, still generating revenue, but not yet commissioned, that power we can start cutting into, we can start entering the merchant market. And so, as you know, it's really worked out well for us because there have been merchant prices that have been higher than sometimes the PTA prices have been.
Speaker Change #115: Second thing is that the moment the project is deemed technically commission.
Speaker Change #115: You didn't have to sell to start selling it under the PPA to the N Cisco.
Speaker Change #115: Whereas when it is many of those you know Phil Genuity revenue, but not yet commission that probably can start selling it doesn't we can sell into the merchant market.
Speaker Change #115: So as you know, it's really worked out well for us because there's been other merchandising had an hour then sometimes of BDO prices had been but that gap is as I said, it's mattering now so that isn't going to be a big gap going forward.
Sumant Sinha: But that gap, as I said, is narrowing now. So there isn't going to be a big gap going forward. To answer questions separately on merchant sales, I think merchant sales in our portfolio will represent maybe about 10 to 15% of our total portfolio in general. I don't think that number will be more than that.
Phil Genuity: To answer your question separately on merchant, Phil I think Morten Pearson Airport for Lulu represent maybe about 10% to 15% of our total portfolio engender I don't think that number would be more than that.
Sumant Sinha: And that will be a function of some of these projects that are being sold into the merchant market on an interim basis while they're waiting to get commissioned. Or there are certain other projects, especially for complex projects, where there are several components that are required to be commissioned before the project can be deemed to be commissioned. In which case, if you commission the individual, let's say, a wind farm or, you know, a tool or a solar farm, then those projects, until they're being commissioned, can also send them to the merchant. And so that's the second nature of our sales to the merchant market.
Phil Genuity: And that'll be a function of some of these projects that are being sold into the merchant market on an interim basis, maybe to the commission.
Phil Genuity: There are certain other products, especially for the complex projects, where there are several components that are required to be commissioned before the product can be used to be commissioned in which case, if you're a commissioned the individuals they have been for them.
Phil Genuity: Or you know or two or a solar farm then those probably something that the commission can also send me because I mentioned muscle.
Phil Genuity: So that's the second nature of our sales into the merchant market. The third will be a workflow of a follow up from somebody RPC fabric that we will be executing in the future and therefore may be pure merchant.
Sumant Sinha: The third will be the overflow of power from some of the RPC projects that we will be executing in the future. And the fourth will be pure merchant projects that may be doing merchant sales for a year or two before we put them into them. But the aggregate of all of that is unlikely to exceed 10-15% of the total. Okay, I got it. Very helpful. Thank you. Your next question comes from Puneet Gulati with HSBC. Thank you so much.
Phil Genuity: But maybe to bring merchants it for a year or two before we put them into a piece of it but the aggregate of all of that is unlikely to exceed 10% to 15% of that business.
Speaker Change #117: Okay got it very helpful. Thank you.
Mike: Thank you Mike.
Speaker Change #119: Next question comes from Puneet Gulati with HSBC.
Speaker Change #120: Yeah. Thank you so much my first question is on the.
Puneet J. Gulati: My first question is about the additional project that you've won. How soon do you think you'll be able to sign PPA? And if you can give some color on out of the 62 gigawatts that the government auctioned out, how much has already been signed for PPAs? Yeah, so of the 8 gigawatts that we had won last year, as I think I said in my remarks, about 1.5 gigawatts worth or 1.7 or 1.8 gigawatts of PPAs have been signed.
These men.
Speaker Change #121: Well it just that you've won.
Speaker Change #122: How soon do you think you'll be able to sign ppas.
Speaker Change #123: If you can give some collateral although if you do go up that government auction dealt with how much they're going to do fine.
Speaker Change #123: Yeah. So after after.
Speaker Change #123: It could go up that we had one last year.
Speaker Change #123: As I had a good thing I said in my remarks about wanting to halve gigawatts worth of 1.78.
Speaker Change #123: A lot of things have been fine and therefore, the balance six gigawatts of that about 50 left can be side.
Puneet J. Gulati: And therefore the balance 6 gigawatts or thereabouts is still left to be signed. Now there was some slowdown in PPA signing because the code of conduct was in effect, as you know, for the last couple of months.
Speaker Change #123: There was some slowdown in PPA signing because before the contract was in effect as you know for the last couple of them and so some of the government agencies are going a little slow down it was really for the quarter on liquidity. Please.
Speaker Change #124: That has got finished I expect that some some more people is a good thing, but I think this process will take a little bit of time puneet that maybe as I said in six to nine months to get somebody to get most of the all of the PPA phone.
Speaker Change #125: Hum simply because some of them are complex projects and therefore, there needs to be a high degree of engagement between the sponsor and.
Sumant Sinha: Simply because some of them are complex projects and therefore there needs to be a high degree of engagement between the DISCOMs and the bidding agencies to explain to the DISCOMs, and so on. And there has also been a complicated process, as you know, the DISCOMs have to get approval from their regulatory agencies as well. So that whole process is a little bit longer, especially for the more complex ones. So that's why my sense is that over the course of this fiscal year, the remainder of the fiscal year, most of the PPEs will get, And when you sell in module manufacturing, you seem to have 6.2 gigawatts of module manufacturing, but your own plans indicate roughly 2 gigawatts of annual installation. So how should we think about the balance capacity? Would you be willing to sell it in the market, export it, or within India? Any thoughts?
Speaker Change #125: The bidding ADT.
Speaker Change #125: This comes in and so on and there has also been a complicated.
Speaker Change #125: As you know the mix going back to get approval from the regulatory agencies as well, but that whole process of them, a little bit longer, especially for the more complex stuff.
Speaker Change #125: So that's why my sense is that over the course of this fiscal year the remainder of the fiscal year. Most of the people is a good thing.
Speaker Change #125: And then in Modine manufacturing just impressive.
Speaker Change #125: While the manufacturing, but their own plans indicate let's be the.
Speaker Change #125: The low dose and women's selection, so how should we think about the.
Speaker Change #126: Our balance because things would you be willing to sell it out in the market a full day thawed within India and Pakistan.
Speaker Change #127: Yeah. So you know it takes a lot to gigawatts of capacity will essentially be producing about $4 seven gigawatts of actual module, which will be oh and for our own two gigawatts, we need to give them. The oversizing about two point I went to the web.
Sumant Sinha: Yeah, so you know, with 6 gigawatts of capacity, we'll essentially be producing about 4.7, 4.8 gigawatts of actual modules, which will be, and for our own 2 gigawatts, we need, given the oversizing, about 2.7, 2.8 gigawatts. So the balance we do intend to sell into the market. Now, there are two ways in which we're going to sell that. Number one is as pure modules, you know, maybe on a tolling basis or, or whatever.
Speaker Change #127: So the balance we do intend to sell into the into the market now there are two ways in which we're going to say that number one is as pure module.
Speaker Change #127: You know, maybe on a tolling basis or whatever.
Speaker Change #127: And the second is along.
Speaker Change #127: Along with the fed.
Sumant Sinha: And the second is, along with the sales that we are going to commission very soon. Now in the sales, as you know, there are two different markets that we can sell into. One is the DCR market domestically, which includes the rooftop schemes and the student hub scheme.
Speaker Change #127: I Wonder if the commission very soon now in the sales as you know there are two different markets that you can sell into one is.
Sumant Sinha: And the second is, of course, the export market as well, where, as you know, in the U.S., particularly, they are now putting new import curves on Chinese and Southeast Asian cells. So that is likely to become an attractive market for Indian companies. We can, of course, also sell the cells along with the modules in the domestic market. That is also, of course, possible. So, I guess we would be selling about 1 to 2 gigawatts a year of modules, and all cells potentially separately or together, depending on where you get the best you like, and that number may decrease as we ramp up our own solar economy.
Speaker Change #127: M B the Dci market domestically, we can choose the scheme. So the sooner they go to school.
Speaker Change #127: And the second is of course, the export market as well.
Speaker Change #127: As you know in the U S, particularly there now pudding.
Speaker Change #127: New import goods from Chinese and South East Asian service, so that is likely to become an attractive multiple and themselves.
Speaker Change #128: And of course also say the sales along with the volumes in the domestic market that is also of course the possibility. So I guess, we would be selling about one two gigawatts of modules.
Speaker Change #128: And all the cells potentially separately or together.
Speaker Change #128: Depending on where you get the best realizations.
Speaker Change #129: And that number with me the freeze as they ramp up at one <unk>.
Speaker Change #128: So on that execution.
Speaker Change #128: Yes.
Sumant Sinha: How has your experience been in terms of operating costs for the module manufacturing so far? So far, it's been very good. Of course, we have started module manufacturing for the first time, and a lot of people have started off at the same time. And so there is a shortage of the right kinds of skilled workers.
Speaker Change #130: And how is it if we didn't think in terms of operating costs for the module manufacturers.
Speaker Change #130: Yeah.
So far it's been very good of course, we have started our module manufacturing for the first time.
Speaker Change #130: And all.
Speaker Change #130: And you know a lot of people have started up at the same time and so there is a shortage of a.
Sumant Sinha: So, therefore, I think ramp-up times have been a little bit longer. But I would say, by and large, overall within our budget, that everything is now getting to a good level of stabilization in terms of cost, production, and quality. Lastly, if you can talk about how much higher IRR you think you'll make on hybrid over solar once again, I might have missed that, on complex projects versus solar, you think? Yes, complex projects. So the thing is, you know, first of all, complex projects have a higher component of wind, and wind is much harder to implement for most people.
Speaker Change #130: The lifetimes of scalable workload. So therefore, I think ramp up volumes have been a little bit longer, but I would say by and large all within our budget.
Speaker Change #130: And.
Speaker Change #130: I think.
Speaker Change #130: Everything is now getting to a good level of stabilization in terms of costs and production and quality as well.
Speaker Change #130: Yeah.
Speaker Change #131: Lastly, if you can talk about the hubbub Hyatt I Gotta do you think you'll make one hybrid was once again.
Speaker Change #131: Yeah.
Speaker Change #132: On a complex projects with us what are your thing.
Speaker Change #132: Yes.
Speaker Change #132: So the thing is you know first of all complex bar mix, Hello, Hi, incompetent go Green and.
Speaker Change #132: And when there is much harder to execute for most people and therefore, you just have fewer bigger because you have fewer bidders and therefore, the relative competitive intensity is a lot lower and therefore you end up.
Sumant Sinha: And because you have fewer bidders, the relative competitive intensity is a lot lower. And therefore, you end up usually stopping at tariffs which are commensurate with the least efficient bidder. And therefore, us being, in most cases, the most efficient bidder, end up making those extra margins on the extra capital. Constituency. Puneet Gulati, Kedar Upadhye, Sumant Sinha, Amit Bhinde, Nikhil Nigania, Kedar Upadhye, So how much higher IRRs should one pick up?
Speaker Change #132: Usually stopping at that is rich.
Speaker Change #132: Does that come into it with the least efficient beta.
Speaker Change #133: Right and therefore must be in most cases, the most sufficient buda and making the next summer games on do you accept that as long as they're bidding shops.
So in Pennsylvania.
Greg: Hey, Greg Yeah, Yeah.
Sumant Sinha: You used to take 15 to 20% for your vanilla solar projects. What should be... Yeah, so I think that I'll give you ranges because obviously they tend to move a little bit depending on the bid and so on. But solar typically would be, I would say, 17 to 18% in terms of Mercury IRR.
Speaker Change #135: Yes, so how much higher that should run because used to basically came to 20% of your.
When you Love Solar project.
Speaker Change #135: What should be well you know yeah. So I think there's a I'll give you. The reason is because obviously the they tend to move a little depending on the bed and so on but.
Speaker Change #135: So a lot of typically would be I would say a 17% to 18%.
Sumant Sinha: Complex projects are probably about 19 to 20%. Okay. [inaudible] And there is also, you know, it's also that they are harder to execute. They are harder to execute as well, and that is why you get that extra return. Thank you so much and all the best. Your next question comes from Maheep Mandloi with Mizzou. Hey, hello, everyone.
Speaker Change #135: In terms of liquidity either.
Speaker Change #135: Complex projects that probably about 19% to 20%.
Speaker Change #135: Okay.
Speaker Change #135: So just to hundreds of clients.
Speaker Change #136: Yeah, Yeah yeah.
Speaker Change #137: That's right.
Speaker Change #138: And there is you know that's helpful. Thank you.
With me are harder to execute without having to execute again and that is why you will get better.
Speaker Change #138: Yeah.
Speaker Change #138: Okay.
Speaker Change #138: And that's it thank you so much and all the business.
Speaker Change #139: Thank you.
Your next question comes from the head Mandalite witnesses.
Maheep Mandloi: Thanks for taking the questions. Thanks for the presentation. There's definitely a lot of information there.
Speaker Change #140: Hello, everyone and thanks for taking my question, so I know some of them.
Speaker Change #141: So because it was actually it was definitely a lot of information there.
Maheep Mandloi: We'll probably take some time to unpack that, but maybe, at a high level, there's some conservatism baked into the long-term guidance here. Just looking at, for example, the nine times EBITDA assumption on asset recycling that seems lower than the previous sale last year and just where some of these peers or companies are trading in India, right? So overall, I'm just trying to understand, like, what buffer do you have on the top end or the bottom end on the guidance here? Kailash, do you want to take this?
Speaker Change #142: That's when the time comes back that Oh, but maybe high level.
Speaker Change #143: There's some conservatism baked into the long term guidance here just looking at like for example, the.
Speaker Change #143: Nine times EBITDA assumption on I said recycling that seems lower than your previous sale last year and just with the most of these here's a company that's sitting in the window that so so overall I'm just trying to understand.
Speaker Change #143: What do you have on the top line or the bottom end up on the guidance here going forward.
Speaker Change #144: Can I ask do you want to take that.
Speaker Change #144: Yeah sure Mohit, so obviously it will be the market dependent transaction.
Kailash Vaswani: Yeah, sure. Maheep, obviously, these are market-dependent transactions, and that's why you know we are working with a range. We will obviously target the top end of what we are sort of guiding towards, but you know we just need to be a little bit conservative. I appreciate that.
Speaker Change #145: And that's why you know we are working with a range.
Mohit: Obviously, you're targeting the top end of what we are sort of guide in guiding towards but you know, we just need to be thinking becomes overdue.
Speaker Change #147: Got it I don't think she then and Ah.
Maheep Mandloi: I mean, maybe in terms of just like the solar module, Supplier. Question on selling those internationally. Is any of that one and a half, two gigawatts per year right now in the guidance, or is that an upside to the guidance here? Sorry, I couldn't catch it. Kailash, if you did, can you answer?
Speaker Change #148: Maybe in terms of just like the solar module.
Speaker Change #150: Supplier question on selling buildings nationally is any of that wanted to have two gigawatts per year right now and the guidance says that's an upside to the government yet.
Speaker Change #149: Let me say this.
Speaker Change #149: That's in the market.
Speaker Change #149: So yes.
Speaker Change #151: Collage. If you did can you answer yes, no I couldnt I couldnt be the case here again.
Maheep Mandloi: No, I couldn't either. Can you say it again? [inaudible] So, Maheep, that's not part of the guidance at this point. And maybe this is the last one, and I'll catch up later on with you guys. But on the elections, any thoughts on how the new... I mean, obviously, they're pretty fresh here, but any early thoughts on how that changes things? Any dynamics on demand, growth, or supply or anything else from your point of view? No, Maheep.
Speaker Change #152: Yeah sure.
Speaker Change #153: You talked about one and a half to two gigawatts of solar modules to the international market.
Speaker Change #155: And we'll do everything in conjunction with just curious if that is in the guidance or is that could be upside to the EBITDA.
Speaker Change #154: You did give guidance.
Speaker Change #156: So that means I can add something here that's yeah, that's money out of the guidance at this point in time.
Speaker Change #157: And then maybe just last one another.
Speaker Change #158: Kind of what's wrong with you guys, but now on the elections.
Speaker Change #158: But somehow the.
Speaker Change #158: I mean, obviously, that's a decision yet, but but any early thoughts on how that changes anytime Exxon has it been.
Speaker Change #159: There are supply or most of them are from.
Speaker Change #159: From your point of view.
Speaker Change #159: Normal heap I don't think that we expect any change to happen. This government has already been very supportive.
Maheep Mandloi: I don't think that we expect any change to happen. You know, this government has always been very supportive. And, you know, a lot of that comes directly from the Prime Minister, as we all know. But the government, overall, also has very strong commercial reasons. One, of course, as we talked about, power demand is growing, and renewable energy is the cheapest, cleanest way to meet that power demand. So there is a very strong economic and commercial reason for the whole renewable energy effort to go on.
Speaker Change #159: And you know a lot of that comes directly from department stores Walmart, but the government is also very strong in commercial movie.
Speaker Change #160: One of course that you talked about power demand was doing renewables is the cheapest cleanest way to meet all the demand. So that is a very strong and economic information leaves them for.
Maheep Mandloi: But even beyond that, you know, I don't really expect anything to change because some of the alliance partners are also very strongly supportive of renewables and have been in the past when they were earlier in state government. So I would expect that the same exact policies will continue, and there will be a lot of continuity in policy making in the coming few years. Thanks for your attention. Your next question comes from Agnieszka Storozynski with Seaport. Angie, your line is open. Agnieszka Storozynski from Seaport, please go ahead. Yes, I'm here. I'm so sorry about it.
Speaker Change #160: The whole renewable energy, that's what they're getting on but even beyond that you know I don't really expect anything to change because some of the alliance.
Speaker Change #160: Alliance partners are also very strongly supportive of renewables and had been in the past you know than they were earlier than in the in state governments. So I would expect that the same is that policy will continue and there will be a lot of continuity and volatility in the coming two years.
Speaker Change #161: Uh huh.
Speaker Change #162: Thanks for the questions.
Speaker Change #163: Your next question comes from Andrew Steinman ski with Seaport.
Speaker Change #163: Angie Your line is open.
Speaker Change #163: Yeah.
Speaker Change #164: Angie stores in ski from Seaport. Please go ahead.
Angie: Yes, I'm here I'm, so sorry about it. So it was my first question I'm, sorry, I noticed that the.
Agnieszka Anna Storozynski: So my first question: I noticed that the complex projects are now built, and they came online. And I know that they're not commissioned yet. They're not dispatching under the PPAs.
Speaker Change #166: Complex projects are now del Tin they they came online and I noted that no commissions you have to not not dispatching under the Ppas, but I'm just wondering if if so the last couple of months with their operational are you seeing that's that the dispatch or the output from these assets is in line with your expectations.
Sumant Sinha: But I'm just wondering if, for the last couple of months that they're operational, are you seeing that the dispatch or the output from these assets is in line with your expectations? Again, I understand that they're now merchant, but again, is there any confirmation of your theoretical models of how these assets might be working under the PPAs? Yes, so, Angie, you know, what is commissioned right now is just a plain vanilla wind project.
Speaker Change #166: Like and I understand that they're now merchant, but that again is there any.
Speaker Change #167: Yeah, you know sort of a.
Speaker Change #167: Of your theoretical models of how how these assets might be I'm working under the Ppas.
Andrew Steinman: Yeah. So Andrew you know walk us commissions I can always disciplined wind project.
Sumant Sinha: So, it's very hard to extrapolate from there about how the whole thing would work once it comes together. You know, it's just like, it's just a wind project just like any other. And right now, whatever power we produce, we sell into the exchange. So, it's very hard to be able to forecast from there.
Andrew Steinman: So it's very hard to extrapolate from there.
Andrew Steinman: About how the whole thing would look once it comes together.
Andrew Steinman: You know, it's just like this doesn't mean projects just like any other and right now what we're producing we're selling into the into the exchange. So so its way out to be able to forecast them, but I think it's all he wants the the solar project comes on stream and the batteries come on stream that will actually be able to come.
Sumant Sinha: I think it's only once the solar project comes on stream and the batteries come on stream that we'll actually be able to combine the whole thing and start getting a better sense. But, you know, for the last one year, we have been doing that in our digital twin. So, we have been able to replicate the performance of the plant as if it were running over the course of the last year.
Andrew Steinman: The only thing that stopped getting a better sense, but you know for the last one year.
Andrew Steinman: I have been doing that Oh digital trade. So we have been able to replicate the performance of the plant as the godaddy over the course of the last year and therefore, we've been able to fine tune the design and so on this effect. So I would say that's even months old plant comes on they would not be very significant.
Sumant Sinha: And therefore, we've been able to fine-tune the design and so on based on that. So, I would say that even once the whole plant comes on, there will not be very significant, if at all, any deviation from what we anticipated, because of this digital capability that we did, you know, develop. My other question is about your existing wind assets. Are you seeing any issues with performance, especially of those older assets?
Andrew Steinman: If at all any deviation from what we anticipated.
Andrew Steinman: Because of this digital capability that could be a little bit.
Andrew Steinman: The other thing.
Speaker Change #169: And my other question is for your existing wind wind assets E seeing any any issues with with performance, especially off those older assets. You know you know any changes for example in the P. L laughs not because of weather patterns, but that's because of aging of these.
Sumant Sinha: Any changes, for example, in the PLFs, not because of weather patterns but because of the aging of these assets? I mean, obviously, we're seeing a lot of repowering of wind assets here in the U.S., and I'm just wondering if the same could be true for your assets, and more importantly, if there is any deterioration or aging of these assets reflected in basically lower outcomes? No, Angie, so far we have not, not... We have not seen any meaningful data from the earlier design curves.
Speaker Change #169: Assets and I mean, obviously, we're seeing a lot of repowering of wind assets here in the U S and I'm just wondering as the same could be true for your assets and a more important me. If there is any deterioration of our aging of these assets.
Speaker Change #170: Flex it in basically in our output.
Speaker Change #171: No Andy so fuzzy if not a month.
Speaker Change #172: You don't see any meaningful delta from a deal yet.
Speaker Change #173: Thank God.
Speaker Change #172:
Speaker Change #172: You won't keep in mind that athletes.
Sumant Sinha: You know, keep in mind our assets; our wind assets are only about 12-13 years old. The oldest assets that we have, so it's not, we have not seen any wide dispersion yet. But, you know, even if we were to replace them with newer turbines, it would not really be costly to do that. And the PTA terms very often require us to continue with the same wind turbines that are installed. I don't think that repowering here is going to be a possibility, at least until the time the PP is upstanding.
Speaker Change #172: It's only about 12 13 years it looks like now so the oldest assets that you have so we have not seen any any wide dispersion yet.
Speaker Change #172: But we don't even if he were to.
Speaker Change #172: It's a place them with newer turbines at the modern can be cost effective.
Speaker Change #172: To do that and the PPA terms very awesome required us to continue with the same.
Speaker Change #172: Wind turbines installed so.
Speaker Change #172: I don't think that Republic is gonna be a possibility.
Speaker Change #172: At least until the time the P. P is outstanding really subsequent to that we could use the same interconnect to be have the same land that we have.
Sumant Sinha: Maybe subsequent to that, we could use the same interconnect that we have, the same land that we have, and so on, to then, you know, put up new wind turbines and connect those. And then, you know, depending on whether the merchant market makes sense or some other PPA market makes sense, we can then look at that. But we are still, you know, at least a decade away.
Ben: And so on to Ben you know put up new wind turbines in.
Ben: And then you know depending on whether the merchant market make sense are there. Some other PPA market makes sense, we could look at them.
Ben: But we're still you know.
Ben: But at least a decade away from there.
Speaker Change #175: And then the last one when you show us protections of EBITDA and net debt or leverage.
Agnieszka Anna Storozynski: And then the last one, when you show us projections of EBITDA and net debt or leverage, those are reflective of asset sell-downs. And so basically, it's your share of EBITDA and your share of net debt after accounting for minority interest. Is that right?
Speaker Change #176: Those are reflective of asset sell downs and so basically what's your share of EBITDA and your share of that that's after accounting for minority interest is that is that right.
Speaker Change #176: Hello.
Speaker Change #176: So.
Kailash Vaswani: So as of now, we are reporting the gross numbers for both the debt and the EBITDA. But when you show projections, like, you know, like, you know, 15 to 16 gigawatts of assets, and they show me the range of that EBITDA, would that reflect already assets, divestitures, to finance that this incremental EBITDA stream? So only the assets which are sold 100% get taken out fully from both debt, EBITDA, and profits, or the rest of the assets are consolidated on a gross basis.
Speaker Change #177: We are reporting the gross numbers.
Speaker Change #178: Promote the debt and EBITDA.
Speaker Change #179: But when you show projections like you know that.
Speaker Change #179: 15 to 16 geeks of assets and he told me that range of that EBITDA would that reflects already asset divestitures, just announced that this incrementally that that stream.
Kailash Vaswani: And then there's a minority interest taken out at the bottom, at the Net Income Level. Okay. Thank you.
Speaker Change #179: So only only the assets such as 400%.
Speaker Change #179: Those get taken out for Lee from both a debt to EBITDA and profit or the rest of the assets are consolidated on a gross basis and then there's a minority interest take oh at the bottom.
Speaker Change #180: Other net income half okay. Thank you thanks, yeah.
Speaker Change #180: Yeah.
Nikhil Nigania: Your next question comes from Nikhil Nigania with Bernstein. Thank you for taking my question. I just had one question.
Speaker Change #181: Your next question comes from Nicole <unk> with Bernstein.
Nicole: Yeah. Thank you for taking my question I. Just had one question are there are two big events happening on the transmission front, one happened last year with the implementation of journey and second coming next year with possibly three transformation going on Interstate transmission going away for renewables.
Sumant Sinha: There are two big events happening on the transmission front. One happened last year with the implementation of GNA, and the second is coming next year with possibly free transmission going away, and interstate transmission going away for renewables. I wanted to understand what impact these two events are having on your strategy, and even in the industry. Do you see a change in behavior due to these two events?
Speaker Change #183: Wanted to understand what the implication is it having on your strategy.
Speaker Change #183: And b, even into the industrial Youll see a change in behavior.
Speaker Change #184: Due to these wins.
Speaker Change #185: Yeah. So in the case, so far we haven't seen a significant change in behavior, but especially the second event is likely to have an impact because.
Sumant Sinha: Yeah, so Nikhil, so far, we haven't seen a significant change in behavior, but especially the second event is likely to have an impact, because, you know, if, in fact, let's say I win a project today, that is going to be commissioned three, four years from now, after the full transmission charge has been exhausted, levied. And therefore, as a buyer of that power, I have to pay, let's say, a rupee, or rupee 50. Now, in a number of cases, that number may end up being more than if I were to produce that power in my own house.
Speaker Change #185: So if in fact, the let's say if I win a project today that is gonna be commission three four years from now after the full transmission charges.
Speaker Change #185: Yeah.
Speaker Change #185: And therefore that there is a buyout of their father I have to pay let's say it'll be it'll be 15 for the transmission charges and I have to add back to the power generation Charles although the bidding.
Speaker Change #185: Now in a number of cases that number may end up being more than if I were to produce that bothered them downstream.
Sumant Sinha: And therefore, there'll be different, you know, different views that different states will emerge. One set of states will say, you know what? It makes no sense for me to buy from some other state; I'll do it within my own state, right? And a second set of states, even despite the transportation charge, will still not be competitive. Or the land cost may be too high. Or there may be some other cost dynamics that don't compensate them.
Speaker Change #185: And therefore.
Speaker Change #185: Therefore, there'll be different you know different views that different states.
Speaker Change #185: The merger with <unk>.
Speaker Change #186: One set of states and say you know what it does it makes no sense for me to buy it from somebody to stay that goes within my own speed right.
Speaker Change #186: And the second set of states, even despite the translation jobs and still not be competitive for the land cost may be too high or there may be some other cost dynamics.
Speaker Change #186: That doesn't compensate them so for them the costs will go up or what do you think it would be over that and again, there's nothing that can be done about that.
Sumant Sinha: So for them, the cost will just go up for purchasing renewable energy, and there's, you know, nothing that can be done about that. But as a result of this, in some of the states which have reasonably good renewable energy resources but which are not the best, there may be the development of an STU-based..., or an interstate connectivity-based approach. Now, some of those states, like Gujarat, for example, may have a relatively good enough off-taker credit quality that they will be able to do interesting things, but there may be others that may not have a good enough credit quality. And therefore, they may have to get the bidding agencies to do state-specific bids, where the bids are set up for the STU within those state governments.
Speaker Change #186: But as a result of this themselves the states, which have reasonably good renewable energy the source, but which is not the best then they may be the development of a new steel based market.
Speaker Change #186: Interested.
Speaker Change #186: You know connectivity based approach.
Speaker Change #186: Approach.
Speaker Change #186: Now some of those states like good it out for example may have thought that it could be good enough offtake or credit quality.
Speaker Change #186: They will be able to do interesting, but there may be others that may not have a good enough for the quality and therefore, they may have to get the big agencies to do state specific bids where the bids are set up for that U S steel within those departments and we've seen that like that in the Boston. The other Sun for example had done let's say.
Sumant Sinha: And we've seen bids like that in the past when Rajasthan, for example, had done a second bid in Rajasthan for the local market. So we could have that kind of thing. So what will happen is that there will be a shift in some of the non-RE rich states where they start doing procurement from within their own. And therefore, we are now looking at how we need to shift our own connectivity strategy to make sure that we block a reasonable amount of... Goods sites in State Governments, even though on an absolute basis, they may be more expensive than putting a project structure in that.
He's been with us for the local market. So we could have that kind of thing so what will happen is.
Speaker Change #186: That there will be a shift.
Speaker Change #186: In and sell the non intelligent audio, which states, where they start bringing our procurement from within their own state.
Speaker Change #186: And therefore, we are now looking at how we need to shift out on our connectivity strategy to make sure that we block the reasonable amount of good sites and state governments, even though on an absolute basis, there may be more expensive than putting up all this let's say about yourself.
Sumant Sinha: Indicator Solar, but with the transmission charges, it may not be possible. So those are the kinds of things that we are now working on to figure out exactly how this whole dynamic is going to change the spread of renewable energy projects across the world, and basically working to flex our development strategy along with it.
Speaker Change #186: It gives us a lot, but when the translation charges that may not be right.
Speaker Change #186: So those are the kinds of things that we are now working on to figure out exactly how this works dynamic is going to change the spread off to me, but I'm gonna do projects across the country and they said we are working to fix our development strategy along with that.
Speaker Change #187: Makes sense, that's very helpful. Just one related question.
Speaker Change #187: Once it's all implemented I think now the concept of what appraising that stay tuned.
Speaker Change #188: D C followed our dispatch superpower.
Speaker Change #189: Would that imply that the transmission charges would be I, suppose what sized capacity or that sort of contracted capacity for the buyer.
Speaker Change #190: They would be as per their contracted capacity, because that's really what you're going to be using.
Sumant Sinha: And so the issue is going to be that, You know, co-located projects may actually make more. [inaudible] Then it may make sense to use the transmission line more efficiently to bring down the transmission, and that may be the more effective or the cheaper way of doing it than to be putting it up in the better data. And so, that's the second way in which we are now re-looking at our project development strategies, which is how do we get places which have good both wind and solar power so that we can think about co-locating and, therefore, bringing on the transmission.
Speaker Change #190: And so the issue is going to be actually bad.
Speaker Change #191: You know co located projects may actually make more sense.
Speaker Change #191: Now then the security budgets, so right now as you know theyre, putting a been separately so let's separate that.
Speaker Change #191: Because transmission charges a fee, but once you start getting charged for the transmission.
Speaker Change #191: Then it may make sense to use a transmission line more efficiently to bring down the transmission charges and that maybe the more effective more cheaper way of doing it than to be putting it up into better data yet and so that's the second way in which we are now looking at our drug development strategies, which is how do we get places which have both.
Speaker Change #191: They have good both wind and solar so that we can think about quality thing and therefore, beginning on the transmission charges.
Speaker Change #192: It makes sense very helpful. Thank you so much for answering my questions.
Nikhil Nigania: Make sense. Very helpful. Thank you so much for answering. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect, and many more
Operator: I'll see you next time, and many more times. And we'll see you in the next video. Bye. [inaudible] and many more. We'll see you next time. (inaudible)
Speaker Change #193: Once again, if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change #194: Yeah, no further questions at this time.
Speaker Change #195: That does conclude our conference for today. Thank you for participating you may now disconnect.
Speaker Change #194: Okay.
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