Ladies and gentlemen, good day and welcome to ACME Solar Holdings Limited Q2 FY26 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rupesh Sankhe. Thank you, and over to you, sir.
Good afternoon, everyone. On behalf of Elara Securities, we welcome you all for the Q2 FY2026 of ACME Solar Holdings. I take this opportunity to welcome the management of ACME Solar, represented by Mr. Manoj Kumar Upadhyay, Chairman and Managing Director, Mr. Indira, CFO.
I'm so sorry to interrupt you, Mr. Manoj, sir, but your voice is breaking.
Mr. Ankit Verma, Head of Corporate Finance, Mr. Arun Chopra, Head of Finance and Accounts. We will begin the call with a brief overview by the management, followed by a Q&A session. I will now hand over the call to Mr. Nikhil sir for his opening remarks. Over to you, sir.
Thank you. Thank you, Manoj. Thank you all for joining us today. I am Nikhil Dhingra, CEO and Director on board of the company. I am, like Manoj mentioned, I'm joined today by our Founder and Chairman, Mr. Manoj Upadhyay, Rajat Kumar Singh, our Group CFO, Ankit Verma, Head of Corporate Finance, and Arun Chopra, Head of Finance and Accounts. It is my pleasure to share the highlights of our Q2 performance. Before we delve into our performance, I'd like to share some sector highlights briefly. The renewable energy sector achieved significant growth with 35 GWs of new capacity additions from January through October 2025, bringing the total installed renewable energy capacity, including hydro, to 247 GW. This expansion enabled renewable sources to contribute approximately 27% of India's total energy generation, marking a historic milestone for the sector.
I would also like to briefly mention a few key regulatory updates which are instrumental in accelerating the power demand and renewable energy installations. There has been a reduction in GST rates, which has been a key reform by the government, on key solar and wind project equipment from 12% - 5%, directly impacting the capital cost and enhancing the viability of solar and wind projects, which would help in reducing the cost of power and, of course, which increases the demand from a renewable perspective as compared to other sources of power. Secondly, the renewable energy purchase obligations have been replaced with a renewable energy consumption obligation, with a wider compliance base prescribed for designated consumers like DISCOM, Open Access, and Captive users. It sets out a progressive consumption target to achieve a minimum of at least 43% RE consumption by 2030.
This will again positively impact the renewable energy demand in alignment with our 2030 renewable energy targets. Also, on the regulatory side, the CRC notified the Third Amendment of connectivity and DNA regulations, which is very important for us, wherein it introduced the concept of solar and non-solar access to accommodate battery energy storage system in the grid. This is aimed at managing the intermittent nature of solar and wind power while maintaining grid stability. This amendment particularly allows the stall of grid power by battery energy storage system for usage of existing connectivity infrastructure, thereby enabling developers to utilize battery energy storage system in their existing operational substations for merchant operations. Also, a very important.
Honorable Supreme Court, taking note of around INR 1.5 lakh crore of regulatory assets, has directed all state regulatory commissions and DISCOMs to formulate time-bound roadmaps for liquidation of long-pending regulatory assets and for the liquidation of outstanding regulatory assets within four years. This would bring much-needed financial discipline into how electricity tariffs are determined. This judgment is a very important one in India's regulatory landscape as it reinforces the statutory obligation of regulatory commissions to ensure timely recovery of costs whilst holding financial liability in the power distribution sector. Now, coming to our company's performance. In this quarter, our execution guidance for FY2026 was to commission 43 MW of renewable energy capacity, and we are on track to achieve it. We have commissioned 378 MW capacity till date and the balance 72 MW is under advanced stages of construction.
We will most likely begin early part of January with that. In addition to our earlier guidance, we plan to approximately operate 1 GW hour of battery energy storage system on merchant from Q4 FY2026 onwards, which is expected to give an upside potential of annual EBITDA of around INR 170 crore, given a price difference of INR 5 between merchant power sale during peak hours and cost of producing the same. With recent commissioning, our operational portfolio now stands at around 2,918 MWs, capable of delivering an annual steady-state project-level EBITDA of INR 2,025 crore-INR 2,075 crore, and an EBITDA yield of around 14%-15%. For our under-construction capacity, which is powering our growth, we signed PPAs with Tata Power.
This is our, in terms of the, it is a private utility, our first with a private utility. It is with a private DISCOM, 50 MW FDRE, firm and dispatchable renewable energy, which effectively is around a battery of around 250 MW hour. In terms of the CapEx, around INR 10 crore per MW CapEx. And 550 MW hour of standalone BESS projects with NHPC, which is within Andhra Pradesh. These two PPAs were signed. This takes our total PPA signed capacity to around 2.3 GWs, which we are executing. During the quarter, we won new projects aggregating to 720 MW capacity, comprising this 50 MW FDRE, which we were able to sign in good time, the PPA, and 670 MW solar plus BESS, thus extending our under-construction portfolio to around 4.5 GWs, which includes the signed PPA capacity of 2.3 GW.
Both these solar and BESS projects, which is 220 MW [RUMSL-Morena] and 450 MW SGWEN, represent distinctive opportunities with strong strategic and financial merit and with a strong counterparty in place. Firstly, the 220 MW [RUMSL-Morena] Solar Park, this project was secured at a competitive tariff of around INR 2.76 per unit, enabling four hours of peak supply and two hours each in the morning and evening while maintaining a maximum annual CO2 of 35%. Attractive tariff is supported by several cost efficiencies, including non-applicability of ALCM, so you can buy Chinese cells in this. This was the last one to catch that timeline. Reduced GST rates. Again, this is the first one to catch this reduced GST rates. Free night charging by DISCOM, which is again a first. Because in all our PPAs earlier, we were charging ourselves.
Here, free night charging by DISCOM, which sometimes comes at a premium for meeting morning peak demand, while tariff remains unchanged on discharge and bundled infrastructure within the solar park. That all comes along with this whole package, making it easier to execute, making it easier to operate. With land and connectivity infrastructure above 33 kV level to be provided by RUMZL, the project benefits from significant CapEx savings. Additionally, the presence of an identified off-taker, because here there is an off-taker which is very keen to sign the PPA as soon as possible. It is expected to expedite PPA signing. Collectively, these factors ensure a strong risk-adjusted return for the project.
As for analysis, we estimate that after accounting for all project benefits, the effective tariff for the bid now should be around equivalent of around INR 3.5 limit plus for a solar plus 2W configuration, leaving mid to high-teen risk-adjusted returns. Secondly, the 450 MW SGWEN project with peak power we won, which is around 2,200 MW hour of battery we will put at INR 6.75. This is again a very attractive tariff. It entails only peak hour supply for four hours to the off-taker. This is one of a new kind of projects which will definitely solve demand because the peak power deficit is a reality. Of course, the solar hour deficit is no longer there for most states, but peak hour deficit is there for most of the states. This solves a problem which will find more takers.
We are getting great demand for this project with various off-takers. We are very hopeful of signing this. The SGWEN took consent of various buyers before winning the bid, which has been the scenario now for all the upcoming bids. In this particular bid, the solar generation will primarily be used to charge the battery with surplus energy sold on power exchange. Given the unique project design, the project is expected to deliver a strong EBITDA to CapEx yield of around 14%-15% and a strong counterparty demand anticipated to drive early PPA signing. With these new wins, our total portfolio now stands at around 7,390 MW, including 13.5 GW hour of BESS capacity and 5,180 MW of PPA signed capacity. We have also placed new orders for 2 GW hour BESS with global suppliers this quarter.
This takes our total BESS orders to 5.1 GW hour till date, which is expected to get installed in a phased manner starting Q4 FY2026. As communicated last quarter, we have successfully commissioned our pilot BESS project of 10 MW hour at our IATS plant to assess the effectiveness in different configurations, which will help us reduce costs and increase efficiency for our FDRE and BESS-rated projects. Coming to our financial performance now, our total revenue for the quarter stands at INR 601 crore, a 104% increase year on year. One key point to note is that because of early commissioning by a quarter and delaying commissioning of one of the connectivity lines and the regulatory line, the ACME SECI project of 300 MW is currently operating under a temporary [DNA/SCOA], basically short-term open access.
Having said that, the connectivity line is anticipated to be operational by December as repeated assertions by CTU and, of course, confirmation at the highest possible level. Post which, the plant will shift to LTOA, long-term open access, and achieve full revenue potential. EBITDA for the whole quarter comes in for us at around INR 534 crore, again up by 180% with margin of 89% as against 87% last year. PAT is at INR 115 crore, with a PAT margin of around 19%. We continue to maintain strong balance sheet discipline. Our net operational debt to EBITDA stands at 4.3X, and our net debt to net worth stands at 1.9X. Further, the days of sales outstanding has dropped to a record low of 27 days as the proportion of central off-taker increased in our operational portfolio, thus giving us a lot of cash flows, early realization of our revenues.
Coming to the capital optimization efforts, we achieved a significant interest rate reduction of approximately 75 basis points on existing INR 2,080 crore debt for our operational projects, driven by the credit rating upgrade. Additionally, one of our operational projects has been refinanced with INR 1,100 crore at an optimized interest rate of around 8.4%, which we see coming down further. On the greenfield side, we secured financing to the tune of around INR 7,000 crore this quarter for our 650 MW FDRE projects from SBI and REC, which will reduce our cost on the ongoing rate on the greenfield because we'll be taking a biased rate and then see what kind of which is possible with the bank financing. On the credit rating, we had a very significant positive, which is like the ACME Solar is now upgraded to AA handle.
It is rated AA minus by both CRISIL and ICRA, which is a very significant positive for us this quarter. Additionally, our 1,100 MW of operational projects received a rating of AA minus from ICRA and CRISIL. So that's something which happened this quarter on the capital optimization efforts. On the operational metrics, just to wrap up, in quarter two, we generated around 153.9 crore units, which is up from over 134% year on year. Also, our capacity utilization factor improved to 24.1% from 22.2% last year, with both plant and grid availability above 99%. With that, I now open the floor for questions. We'll be happy to take them. Thanks a lot.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Yes. Good afternoon, sir. Thanks for the opportunity. My first question is, do you see any risk of cancellation of the projects where PPA is yet to be signed? Do you see a few of the projects which are under LOA getting PPA in the next couple of months?
Right. Right, Mohit. Yes, there is an increased urgency from the central government to basically take a decision for the states to sign the pending PPAs. That is why you see in the last six months, the bids have been low because the government wants to clear up the existing projects first before they go for new bids. Also, the new bids are now coming with a pre-debug locked in such that the PPA signing is not extended because as far as government is concerned, they want to realize the connectivity utilization. They want to improve the connectivity utilization such that there is no connectivity which is not utilized in the earliest possible time. That is a wastage of national resource. As far as our signing is concerned, we have attractive tariffs across hybrid, across FDRE.
We have ongoing conversation at a where either the consent letter is coming or the project is at a board stage. We have, you can say, with four counterparties split equally almost with all the four counterparties. We are quite advanced in a couple of them. Of course, we are not advanced in, let's say, one or two of them. Now what is happening is because of this urgency, we will see that some of them will get signed earlier and some of them may get signed later. If there is a decision taken to basically, let's say, but our tariffs are attractive, so we remain confident because the directive is not to do the legacy PPAs which are not finding any takers. That sort of determination of no demand. We are not seeing in any of our PPAs that there is no demand for it from any state.
There is a demand for the state, but the procedure is a multi-legged sort of procedure at the state where first the DISCOM approves and the regulatory commission approves. We are in discussion with all the REAs wherever we have got a. Unfortunately, in our cases, there is a demand from states. We will, as soon as we have clarity on any of these, we have no negative confirmation from anything that they are not finding takers. We are personally also in touch with most of the states. We are not seeing that there is no takeoff for, let's say, any of these PPAs because the tariffs are competitive, like we mentioned. Some of them, the tariffs are not followed.
Like in terms of the FDRE with 4-hour peak power, there has not been any tender which has come up, which has beaten that tariff because we have throughout the spectrum of that. What makes the earlier ones slightly attractive is that they are coming up in shorter timeline where ISTS waiver is not expiring. There is a benefit to the buyer if they buy that because if a new bid comes, they will surely have to pay the whole ISTS charges. Also, there is a benefit of ALCM because there is a big difference between Indian modules and the Chinese cell modules. These are the benefits which are appealing. Now, the only thing is it's up to the states to take early decisions because, given that we are now picking up on the energy demand, we are hopeful that some of the large states will take up early decisions.
That's where we are on the PPA signing.
Yeah. Understood. The second question is on the transmission issues. It seems like the transmission projects are facing a lot of issues in terms of commissioning. How do you see the risk to the under-construction project which can delay our commissioning timeline?
Sure. Sure. We assess this every footprint in terms of the connectivity timelines of the substations where our projects are coming up. Just to give you some examples. Like Fatehgarh substations, their SCOAs are available, so we can evacuate power from the SCOA. You look at Nemat, you look at [BCANET 3]. They are all coming within the timeline with, at max, one, two, three months kind of a timeline delay. They are all within the PPA. Like a Nemat plant of ours, which we have signed up with Damodar Valley Corporation through NHPC. That is actually coming up early because the Nemat connectivity is operational. It depends on the choices of the substation you allot it to that PPA and whether that is coming on time or not.
What we do is the PPAs which have been signed have got our best connectivities, which are well within the timeline of that PPA. Max delay of a quarter from the signed PPA dates is what we are seeing. As an additional mechanism to peak on our revenue, as we mentioned before, we have lined up the battery installations earlier. That is a separate point, but that is something we are doing on top of this to increase the revenue. Connectivity-wise, from our PPA timelines, we are not seeing delay more than a quarter in the allotted connectivity. It is also a function of whether you have taken the liberty of allotting connectivities which are getting delayed and using the maximum possible time allowed in the PPA or you are looking for early commissioning. Also, the inventory of connectivities available with each and every sort of player.
As far as we are concerned, we have quite a lot of connectivity coming up at various timelines in 2026. That gives us a lot of flexibility wherever. We have taken connectivities with flexibility basis lag and basis bank guarantees, which allow you to allocate the connectivities across PPAs. Very little connectivities we have basis in letter of award, which kind of lock you in. Through our allocation and connectivity inventory, we have been able to address, let's say, if there are delays, they are allotted to later PPAs.
Understood. Thank you and all the best. Thank you.
Thank you very much.
Thank you. The next question comes from the line of Balasubramaniam from Arihant Capital. Please go ahead.
Good afternoon, sir. Thank you so much for the opportunity. This under-average tariff too.
I'm going to talk to you, Mr. Balasubramaniam, but your voice is breaking. Can you please use a handset while speaking?
Right now, it's clear, madam?
Yes.
Yeah. Sir, this current under-construction weighted average tariff is around INR 4.2 per kilowatt-hour, which is relatively higher than current operational portfolio of INR 3.4 per kilowatt-hour. This trend is sustainable, especially driven by FDRE or BESS? Or do you anticipate any tariff compression as the renewable market matures and becomes more competitive?
Sir, madam, thanks for the inquiry. See, in the renewable sector, because the kind of bids is very dynamic, I will request you to look at return on capital employed or EBITDA divided by revenue or EBITDA divided by tariff as a metric because all these PPA, let's say the peak power tariff of INR 6.75, looks high on a top-line perspective, but the capital requirement is also high. I would not compare, I would not do a weighted average of tariffs to realize whether everybody is going up or not because it is also because it takes a lot of batteries there, it takes a lot of solar there to charge. The weighted average tariff is sometimes misleading unless you adjust that for CapEx and unless you adjust that for what is the component of that because each source either generates or stores.
Wind, as you know, sometimes generates higher CUF in certain geographies where the CapEx is slightly higher. The battery is storing and realizes the benefit of the peak power. Of course, the tariff has gone up, but the configuration of PPA is also important. What are you giving there? Let's say somewhere you have a lease kind of a project where you're giving lakh per MW of, let's say, INR 2.5-2.2 lakh per megawatt monthly. The market has got slightly more varied for us to do a weighted average tariff analysis, of course, for estimating our revenue and CapEx, but revenue should be looked at with CapEx. What guidance we can give you is we will always bid for projects with the rate 14%-15% ROC. That is something we really want to stick to. Tariff and revenue, I would request you to not look at it on a standalone basis.
Okay, sir. Sir, on that BESS side, I think we have operational 10 MW-hour pilot with two different container configurations. What are the key learnings regarding efficiency in terms of round-trip losses, degradation rates, and operation reliability? Why I'm asking this question, earlier we have our decision to import complete BESS containers, which is prioritized reliability over cost. Just want to know about the key learnings. Is there any long-term service agreements with our vendors, especially for specific terms regarding durations, performance guarantees, and degradation clauses?
Right. Right. See, we have a mix of technical and contractual reasons to basically prepone the battery CapEx like we explained the last time and before last time. The contractual reason is that it allows us to capture the arbitrage between the peak power prices and the solar prices prevailing. You can use solar to charge or the lower rates to charge the batteries and sell it on the merchant. That makes a compelling business sense. Of course, the CapEx is well within, much below the range we targeted when we had bid for these projects. That makes the commercial part of the decision about getting the batteries early. In terms of the technical part, we, of course, have been operating battery in the group on the green ammonia side for the last four or five years.
Here we were trying to, let's say, work out the various combinations of the PCS, of the battery management system, of the inverters, how we can operate with a particular equipment without a particular equipment. We are pleased to say that we have been able to increase the efficiency. By efficiency, I mean reduce the CapEx and generate the same sort of energy. Also, basically get the reliability in terms of the round-trip efficiency numbers which we have contracted and in terms of the discharge rates we have contracted and we have bought. These all 10 MW-hour each have been done using some of the suppliers which we are going to work with in the future. That allows us to reduce the installation time also as we get these large batteries coming up starting early next month.
It allows us to reduce the installation time, know any sort of surprises we may get in terms of the various equipment, and also reduce the bill of material for the future projects. Some of the configurations we have tested allow us to reduce the CapEx for our ongoing projects where we are yet to order various equipment. It has been quite successful. Of course, it will help us because in some projects, you need to charge only batteries, so you have a little more headroom. In some projects, you are installing batteries where solar is already installed, so it gives you less headroom. I can tell you, let's say, our [Ramzal project], where we are getting nighttime power from the customer. That gives us some more flexibility to try out this experiment.
It is dependent on the configuration of the PPA where you can apply some of these tests we've done. We will apply each and when, and this allows us to improve our convictions on those configurations. In terms of the long-term agreement, like we mentioned last time, we have long-term service agreement for 15 years with the vendors we have signed up. Bet for. Of course, we are paying them annual maintenance fee also, and they will have on-ground people, and they will have on-ground reserves to guarantee the availability and the round-trip efficiency they have told us. We have done the factory in both of our vendors. We have done the factory test also with the required levels of efficiency before the dispatch from the third party. They are in the rate and they are now getting.
They are in the logistics, so they are on the way to come to. Nitin, let me also reply. Here, my name is Manoj. Let me give you one more reply that we were testing the battery for the EMS requirement where we wanted to see how the battery will behave in the various conditions of discharge, not only what is given in the PPA, but also in the support of if we need the battery for what is called ancillary support in the afternoon or in the morning for a short time. We were testing, and it was a very successful test we did in two configurations. Both the configurations helped us to improve not only the long-term discharge but also very short-term discharge. That was the first. Second question, I think what you had is whether the round-trip efficiency is okay, what we have taken in the bid.
Fortunately, we were able to improve by 4%-5% of the round-trip efficiency because of this configurational adjustment. What we wanted to achieve, I think, with these two golden containers, we call it golden containers because they come first, and we do the whole installation testing. With that, we are able to ascertain what we have bidded. Beyond that, some of those improvements which Nikhil mentioned, we could achieve it.
Okay, sir. My next question, I think we have refinanced nearly INR 1,100 crore to 8.4%. Is this a fixed rate or floating rate? What is the average debt tenure? Is there any significant near-term bullet repayments out there? Are we having any hedging strategy given the expectation of volatile interest rates?
Right. So all of our debt which we have refinanced is for a tenure of 20 years average because that is what we have done. In terms of the interest rates, we are effectively getting a rate of around 8% because it's linked to an MCLR plus 10 basis points spread. That is the typical rate we are getting. Of course, because the rating upgrades have happened, in this project where we have reached 8.4%, it is shortly likely to be reduced to 8%. That is the rate we are seeing in all of our refinancings for a double-A asset from bank financing. If we go for a bond financing, we could catch maybe a better effective rate.
Of course, because of the prepayment fees and because of the short-term nature of mutual fund and financing, because typically mutual fund players are only there in the bond, insurance is currently not very highly present for the long term. Infra-debt funds are typically participating along with banks in the long term only. We are able to capture them in the bank financing. 8% is a typical rate for all the refinance, and we are hopeful that we will get all of our portfolio, whichever can be refinanced, to closer to that rate. That is a significant upside for us because this is all floating. To your other question, it is floating because we are able to capture the downside in the interest rate, the down cycle in the interest rate. We have, of course, done one refinancing last quarter which we briefed with Bank of America.
That was on an NTD, so that was fixed at around 8.5% which we achieved last quarter. That is unfixed. We maintain a proportion of fixed and floating. Some of the projects which are coming up for refinancing, we will try and see if we can get a longer-term bond because a three-year tenor we can do, but we are just going to take a decision about that in terms of the economics of it because it requires you to refinance at a shorter interval. In terms of the repayments come up, there is no payment which is not backed by a refinancing sanction in place. We have refinancing sanctions in place for whatever is coming up for refinance.
Got it, sir. Thank you.
Thank you.
Thank you. The next question comes from the line of [Capen Jen] from Avengers Park. Please go ahead. Mr. [Capen], you're not audible.
Hello. Hi. Good afternoon, sir. Am I audible now?
Yes, sir.
Yeah. Thank you. Sir, it's a follow-up to the first question. There was a media article saying that out of the 93 GW of capacity awarded in FY 2024 and 2025, 42 GW is still pending to be signed, BPF is pending to be signed. They are planning to cancel these awards and re-bid these awards. How do you think this will impact the industry, and how does it impact our projects? Are these only solar projects which they will cancel, or even the complex and FDRE projects are in the risk of getting canceled?
Right. Right. So you're right. So basically, their target is primarily the solar projects which have been bidded. And because they were bid very long back also. And like you know that the government has come up with guidelines that no project should come up without storage on a central bid, and that is no longer happening because storage is now a key part of all the upcoming bids. In terms of the take-up at the states of these capacities, there has been a lot of traction in the last three to six months about the improvement in the PPA signing. Like SECI has effectively left around 6-6.5 GWs of PPA left, and the status with the others are also kind of so this 42 GW may have gone down. I think if you look at some numbers, they would have gone down.
The other thing is the regime under which they have been done, that is also sometimes very—the states also like that, that what plant is coming up with what timeline, which allows them to give IFTS waiver or not. If you look at it, these are significant commitments for the state. Each of these projects will have a revenue of at least $100 million or something if you look at the overall bid, and maybe in some cases more than $200 million if you look at a one and a half to two gigawatt bid. Significant decisions for the state. Of course, the bids were done in a quick time, and of course, the inventory clearance takes time. The mandate from the government is for the states to make a decision.
If there is no demand, let's say somebody is saying that they do not want to buy a plain solar, right? They basically have no demand for plain solar because if they had surplus solar in some states, they will basically—but some states still have demand. You see, some of the states are not reaching renewables themselves, and they have some shortage. They are looking at some bids where they call batteries in their state at each substation. We are quite hopeful that this will find takers. It is a matter of time. It is a matter of government policy. I think each REA will take their own decision in terms of each PPA. It will not be very uniform that out of 40, 20 have been canceled or something. Basically, for a government, the decision is about not letting the connectivity go waste.
All this is coming up from the point of view of if, let's say, somebody is sitting with an LOA, their dates have expired for that connectivity, but still they are hanging on to that LOA, neither building the plant. That is a scenario government effectively wants to avoid, as per my reading. That is something which you will see most likely this will converge towards. Not to basically. Wherever there is a dialogue going on, wherever there is a probability of something happening, I think the time will be given. Wherever somebody is putting up a plant in anticipation and there is a fair progress towards building the plant, those will be allowed to continue. That is how we are thinking about it.
Understood. Just in our under-construction projects. There are two solar projects for which I think PPA has not been signed. One is ACME Sigma Urja and ACME Omega Urja. This is 300 MW, one with NTPC and one with SJVN. What is the status on these projects? One of these projects is not there in the current presentation. Are these at the risk of cancellation, sir?
This NTPC project, I think we had updated a couple of months back that it was done in a pooling mechanism with NTPC. I think we had announced through the SOC exchanges also. That project, because that pooling scheme has been canceled by the Ministry of Projects, basically, they were pooling thermal with the renewables. NTPC itself was doing that on their own plant, but I think that is under litigation with Bengal. That project is, of course, that is why.
Understood.
That scheme itself is not there and that we had announced a couple of months back, but that's a special case. That 2.52 with SJVN, that is under consideration because that is under consideration with some states which need that because it is the most competitive tariff in terms of the solar. Now the decision is how they use that solar is up to states. Some of the states have shown interest. If you notice, you can basically track these all PPA things through tariff filings. If you look at.
Right.
Punjab, right? Punjab tariff filings in the various regulatory commissions.
Understood.
You will get to know which all states have signed, which all states are what tariffs. If you look at this specific solar side, you will look at Punjab, which has recently bought 2 GWs of solar, right? They want. That shows that they can want more. They are putting it up to the regulatory commission because it is a multi-state process. Some states have some, like Punjab has a particular demand. Even in summer, they need peak power for their agricultural load. There are some states, specific states, which need that power. That is why SJVN is trying. SJVN is looking at. Some states have called bids. Like Madhya Pradesh was considering it. They have called and they are filing the tariff also. What happens is sometimes they call their own bids. It is a function of each state. I would not say this is a low probability.
This can get signed. We have to go and it is a state-by-state situation.
Understood. Just the last question, bookkeeping question on CapEx. I think we've spent around INR 14,000 crore in first half. Our target was around INR 12,000-INR 14,000 crore. Are we on track for that CapEx?
You see, we have ordered batteries. Like we told you, we've ordered around 5 GW of batteries. LTs have been opened. You can't account for the CapEx in the balance sheet until the goods have arrived. It is very, very lumpy. Like the batteries arrive, you will see this CapEx doubling or increasing because a battery is typically around INR 10,000,000 or so once it's fully installed in terms of the CapEx. INR 5,000 crore of CapEx will be done once we are done with these 5 GW of batteries which are coming up in phases starting from January onwards. INR 5,000 crore on batteries, you can say. The modules, of course, are the last item to come. They are typically 50%-60% of the overall CapEx now with Indian modules. That is also lumpy, right?
The plants which are getting commissioned in June, you will see that modules start coming in January to February there. Modules, you can say around one to 1.5 GW which is targeted around June. You will see that will again have a significant CapEx on them. INR 12,000 crore may get split to June, but I think we are by and large there in terms of the CapEx plan. We have given orders which are in sync with the INR 12,000 crore. The delivery timelines are on track. Like battery has got preponed. Like I said in the connectivity answer, a quarter of connectivity delay may be there, so a quarter of CapEx delay may be also there at max.
Understood. Thank you. Thank you in all the ways, sir.
Thank you.
Thank you. The next question comes from the line of Puneet from HSBC. Please go ahead.
Yeah. Thank you so much for the opportunity. My first question is you talked about division of transmission between solar and non-solar hours. How are you trying to use the non-solar part of it? If you can talk a bit more, can you use it with the existing plants, or will you have to put up additional capacities?
Right. Right. Thanks a lot for the question. See, the non-solar connectivity is a very significant GMA amendment which has come. It is basically aimed at utilizing the connectivity which is operational but not fully utilized because of the intermittent nature of renewable and because of, let's say, six to eight hours of operation of solar. It allows you to basically put up a plant, a pure plant which generates during non-solar hours. You can put up solar there, and you can put up batteries there to charge. The solar is charging that battery, and you can basically discharge during any of the non-solar hours. You can also sell that solar output after, let's say, even the solar you have put up to charge batteries. That can also supply through that connectivity if there is room available in that connectivity because the solar goes like a sinusoidal wave.
You have that non-solar hour connectivity. You can use the output of that solar when you are not charging the batteries to supply through the grid through that connectivity. The aim is basically to use the connectivity to the maximum possible extent. That is where these guidelines really help. Also, they have allowed you to charge it from the batteries from the grid. If somebody does not want to put solar to charge the batteries, they can draw. They can draw power from the grid. They are allowed through this mechanism. That has also been done in this amendment, like we mentioned in the introduction. These are the ways in which you can use connectivity.
Okay. For that, you will need to put up a digital solar plant. There is no way you can use the existing solar plants because you overbuild and optimize. That room is not possible in this. Is it fair to assume that?
Yeah. You can install batteries. For the existing solar plant utilization, what you can do is, let's say, if you have a 300 MW plant, right? If you, in summer, generate more than 300 MW because of, let's say, excess utilization and because of, let's say, if you have some sort of curtailment or some sort of situation where your power is not getting utilized, then what you can do is take a counterparty approval and then supply that excess power into the battery. That is also allowed. Basically, let's say 300, but let's say for one hour of the day, you generate more than 300. That power can go to the battery, and that power can, basically, you can sell outside the PPA also. That is allowed.
Of course, you need to be going above the rated capacity to do that because till that rated capacity, there is a right of first refusal with that counterparty.
Okay. Okay. Understood. Next question.
I want to clarify, just I want to clarify that clipping, if your question was whether the clipping power can be charged. Yes, clipping power can be charged, but you have to take an OC from the existing PPA holder.
Do you have to supply it to the PPA holder at the same price, this clipping power, or can you supply it at market price also?
No, no. You don't need to. You don't need because it's a clipping power. You can charge the battery and supply it in the evening to the market or if you have any other. They don't have a right over 300 MW plus, but of course, you need to apply to them. As per PPA, they have a right of first refusal only till the rated capacity.
Understood. Secondly, you talked about GST reduction also potentially benefiting. Are any discounts coming back and asking for a reduction, or that's not being discussed at all?
For the, see, that change in law is good without saying that any benefit you get, you have to pass it back, of course, depending on the regulations. We are talking more about the demand perspective that it gives renewable an edge over thermal or any other source because they are by and large constant, but renewable have got this advantage of a significant GST reduction. Wherever states are thinking about their future capacity expansions, they will have more reason to buy renewable. In that context, this GST helps. Of course, it helps to reduce the upfront CapEx, but your tariffs will be adjusted for any GST reduction. That is the, so in terms of wherever the PPA allows. That, it is a future benefit. It is not a current benefit.
No. Actually, just to clarify, all our existing PPAs, right, which is getting implemented, we have to pass on this benefit to whichever is implemented in the regime, in the 5% regime. We will pass on that benefit to the customer.
Is it automatic pass-on, or will the discount have to apply for that change in law?
Discount will have to apply.
Discount will have to apply.
Of course, will have to apply. We have been in touch with discoms. So it is basically as for the, I think there is some technical thing where currently the discom is not mentioned in some PPA, transmission is mentioned because it is flowing from within the guideline, but that's a technical point. But as far as the regulations allow, we will have to give that change in law.
Understood. Lastly, on the new capacities that you've set up in the last one year, what kind of CUF have you experienced for your solar and wind?
Our plant at Sikar, right. Adjusted for curtailment, it is doing excellently well, and they are done using domestic modules. Of course, this is our first plant using domestic modules. We have been doing in the, let's say, in the June quarter, 30% plus CUFs. Of course, in the wind, we have installed wind also, like you know. We had a very good quarter on the monsoon quarter. Of course, the second quarter was a normal quarter. We are on track as far as business plan. On the wind side, of course, it's early days because we have 78 MW only of wind. We are yet to see the full year, but by and large, as per our predictions.
In terms of if you can talk in terms of a bit of P90, P70, are they hitting the goal?
For Puneet, I'm going to interrupt you.
Sure.
If you have further questions, please rejoin the queue.
I'll join back. No worries. Thank you.
Thank you.
Yeah. Solar is close to P50. Solar is close to P50. Wind is also around P75. The wind is early days because we are yet to see the seasonal, because the seasonal element is very high in wind. Of course, the expectation in the monsoon season is quite high, and it has delivered. We are yet to see on the, let's say, non-monsoon season. Till now, it is around P75.
The next question comes from the line of Murtuza Arsiwalla from Kotak Securities. Please go ahead.
Yeah. Hi, sir. I just wanted to reconcile. I think my question's sort of answered. We talked about 720 MWs of project wins, but when I look at the change in size of portfolio, it's only 420. I'm guessing that's to do with the NTPC 300, which is taken out from the project portfolio.
Right.
Thank you. You are correct.
Yeah. Sure. Thank you so much.
Thank you. The next question comes from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Thanks for taking my question, sir. As you explained the CapEx details for FY2026. Can you give us some funding details in terms of the debt and equity portions for FY2026 CapEx and next year also, based on your operating cash flows?
Right. In terms of the CapEx, we had a target of INR 12,000 crore CapEx, like we discussed. All of our CapEx is between 75-25 to 80-20 net equity. Lately, we have been getting 80-20 and debt sanctions that are, but typically, historically, it has been 75-25 net equity. For INR 12,000 crore, it will be INR 9,000 crore debt and INR 3,000 crore equity. On 20-80, it will be basically INR 2,400 crore equity and you can say around INR 10,000 odd from debt. That's the basic breakup of each project. Of course, we have the debt. 80% of our signed VP projects have got loan documents done, ready to disburse kind of debts. In some cases, we have drawn the first disbursement. Most cases, we have taken the first disbursement.
The rest of the 20% where the timeline is 2027, we are getting the sanctions done in this quarter also. That's the broad number on the CapEx side. Like we mentioned, bulk of the CapEx is done when the LCs are open. Let's say for batteries, we have done the CapEx to extent we have got the batteries LC open. Now, we have also, wherever the modules, you do four to six months before commissioning. Let's say starting December, January, you will get modules at the site also. It's back-ended. It helps us to reduce the interest during construction component, getting the CapEx done at the, and also, it helps you to deliver just in time in terms of the equipment. Some of the long lead equipments, like transformers, the GIS, they have been opened long back, and they are getting delivered earlier also.
Some of the equipment, which is available in plenty and which contributes a large, let's say, turbines and all, they come just in time, let's say, three to four months before the target COD. Of course, the whole execution is planned around that.
Just follow up on that side. Considering the INR 12,000 crore kind of a CapEx in fiscal year 2026. Our operating cash flows are not such as strong enough to support the INR 12,000 crore kind of a cash flow. In that scenario, we will utilize our cash of INR 3,000 crore, which are already in the balance sheet. For next year, from where will we get the equity portion, because next year also in fiscal year 2027, we are planning a INR 12,000-13,000 crore kind of a CapEx. To manage that, 30% or 25% of the equity to fund that CapEx. Just wanted to understand on that side. If you could a little bit elaborate on that side.
Sure, Yogesh. So see. Like you said, we have that cash in the balance sheet for the current CapEx. We have unbrown securitization proceeds, which is the debt proceeds, the refinancing proceeds of around INR 1,000 crore, which we have not drawn. And there are some refinancing coming up if we add another INR 1,000 crore to that. When the project gets operational and you are going from a 9%-9.5% rate to 8% rate, it leads to the securitization or a refile proceeds getting added to that project. To add to this sort of number, we have the UC, the annual pact with depreciation, right, which is half year, we have done around INR 275 crore -INR 260 crore kind of numbers. If you annualize it, that is the annual cash flow we can make, right, on this side.
As you do, let's say, an 8%-10% margin, which is on the VPC side, that will also generate some cash flows from that organic cash flow donation. Plus, of course, the debt reduction will further, the interest rate reduction will further aid into that cash flows. In terms of the CapEx itself, the INR 12,000 crore number will allow us to do more projects because effectively the rates of the prices of the things have reduced in terms of battery, in terms of solar. Of course, we have shifted to solar-heavy configuration like we have told you earlier. That has also reduced the CapEx required to be done. The INR 12,000 crore number will get us to a fairly higher capacity as compared to the earlier.
We think that in terms of the equity drawdown because of, and the battery, like we mentioned, 1 GW hour will give us around INR 170 crore of cash flow. That is another early sort of revenue generation, which will help us improve the numbers we told you from the past profitability.
Last thing, I would like to also, just a minute, I would like to also add that this year, most of the expenses, what we have done is we have done through equity. Out of INR 12,000 crore, INR 3,000 crore was the equity. I think initial investment, what we have done is all through equity. Technically, what you see, INR 3,000 crore is left in this one. Only a small portion of that will be used in these projects, and the rest will be used for the next year project.
Okay. The last one, other expenses have gone up sharply, and other income was also higher. Any thoughts on that side?
Right. The other income, we had a hedging gain, which contributed because we had hedged for batteries, which have now started dispatching. There was a gain on the hedging side, which has contributed to the other income increase from the last quarter to this quarter. That is the reason for the other income. On the other expenses side, I think it is the increase in the ESOPs and other things which have led to that.
Thanks. Thanks a lot, sir, and best of luck.
Thank you.
Thank you. The next question comes from the line of Akash Mehta from Canada HSBC Life. Please go ahead.
Yeah. Hi. I just wanted to understand on the grid curtailment front. I just want to clarify, actually, is it only related to, I mean, is it related to demand? Is it related to the, I mean, the transmission lines not being available on time, or, I mean, and what kind of capacity is exposed to such issues going ahead and in the current quarter, last quarter gone by?
Right. See, the curtailment, wherever you are seeing, is only because of transmission line deals. There is, because in all the PPAs, there is a mustering clause for renewables. Wherever you have got a long-term open access, you have a legal right to get the full evacuation or full payment for your power that you have generated. What happens is when the line is, let's say, our Seeker plant, which we mentioned, got commissioned earlier, right, in June. The timeline for that line was around September from the power grid, and it got stretched to December now. It is on the below of that last mile connectivity because the land prices in the Delhi region were asked to be higher than before, and there was election there. That led to the prices of that [ROW] or a land parcel in the transmission lines was falling in the Delhi region.
Net relay in that. It is mostly because of transmission line. The only project which we are impacted is this Seeker project, and that is because of early commissioning. We are better off doing it early commissioning than not. We do the maths, are we better off or not? We are overall better off doing it early commissioning. Of course, it will have an impact of 1.5%-2% on the yearly revenue. That is, in an overall sense, beneficial because of the early commissioning.
I mean, go ahead. If we commission on the PPA timelines, and obviously, there's no transmission availability because of some reason, we get compensated. In this case, because of early commissioning, we won't be getting compensated, right? I mean.
Okay. In early commissioning, also see, if you get an LTOA, then you are within the rights. In the STOA, of course, you can ask for compensation, but that is dependent on the merits of the case. LTOA, you are 100% likely to win the case. In STOA, the precedents are yet to be established. That is what we of course try. We of course try, but there are no precedents currently because it is a new sort of case. We will let you know when we get a positive hearing on that. LTOA, there are no issues. How we typically plan is because it was a very short. It was a June 2025 bid where you had to commission projects for June 2025.
It was, you can say, a one-off sort of bid where the gap between PPA and commissioning was very short, and overall, it made sense to commission it. Typically, you do not commission until you have the LTOA. That is where I was saying that this is more of an exceptional situation than a normal situation. In that case, you get the full damage. In STOA, we are yet to see the precedents.
Sure. I think that's quite helpful. Yeah. That's it from my side. Thank you.
Thank you.
Thank you. Ladies and gentlemen, due to time constraint, we'll take that as the last question for today's call. I would now like to hand the conference over to Mr. Rupesh Sankhe for closing comments.
ACME Solar Holdings Management for giving the opportunity to host this call. We also thank all the investors and the analysts for joining this call.
Thank you.
On behalf of ACME Solar Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.