Please note that this conference is being recorded. I now hand the conference over to Mohit Kumar from ICICI Securities. Thank you, and over to you, sir.
Thank you, Neeraj. Good afternoon. On behalf of ICICI Securities, we welcome you all to Q1 FY25 earnings call for Adani Green Energy Limited. Today, we have with us the management. I will now hand over the call to Viral to introduce the management, which will be followed by opening remarks, followed by Q&A. Over to you, Viral. Thank you.
Thank you, Mohit, and good afternoon to everyone. Thank you for joining us in the call. We have Mr. Amit Singh with us, CEO of Adani Green. We have Mr. Phuntsok Wangyal, CFO. We have Mr. Raj Kumar Jain, Head of Business Development. We have Mr. Anupam Misra also, who heads Corporate Finance at the group, and I look after investor relations. So without further ado, we can begin the call with opening remarks by Amit. Thank you.
Thank you, Viral. Lovely to have you here this morning. Let me just start by giving a bit of an opening remark and state some of our operational and financial performance. Adani Green is absolutely committed to achieve 2030 capacity target of 50 GW, including at least 5 GW of energy storage through pumped hydro. With secure sites and clear visibility in evacuation, we are firmly on track to meet this target. We are tirelessly working on developing the world's largest single location renewable energy plant of 30 GW at Khavda in Gujarat. In order to accelerate execution, we have taken three key steps: deployed advanced robotics technology for the installation of solar modules, which significantly enhances worker productivity. We've developed an extensive local supply chain, supporting our execution and contributing to local economic growth.
We established a sustained mobilization of human resources in both Khavda and Rajasthan to ensure a very skilled and dedicated workforce to support our ongoing ramp up. Yesterday, Adani Green operationalized wind power capacity of 250 MW at Khavda. The plant is equipped with India's largest and one of the world's most powerful onshore wind turbine generator, 5.2 MW rated capacity. Khavda has one of the best wind resources in India, as you know, which averages around 8 meters per second, making it an ideal location for wind energy production. This capacity addition boosts the total operational capacity of Khavda to 2.25 GW, combining solar and wind sources. It further strengthens AGL's leadership in India with a total operational portfolio of 11.2 GW. Reflecting on the financial performance for the first quarter, let me just share with you some key metrics.
Our revenue from power supply increased by 24% year-on-year to INR 2,528 crore. Our EBITDA from power supply increased by 23% to INR 2,374 crore, with an industry-leading EBITDA margin of 92.6%. This exceptional margin is driven by tech-enabled operations and maintenance, which are expected to improve further with the integration of AI and ML. Cash profit has increased by 32% to INR 1,390 crore. This strong financial performance is underpinned by a robust capacity addition of 2.6 GW over the past year. Energy sales has continued to increase by 22% to 7,356 million units. Notably, AGL has consistently generated significantly higher electricity than the commitments under power purchase agreements.
In financial year 2024, actual generation exceeded PPA commitments by 11%. In Q1 2025, generation is already at 31% of the annual PPA commitment. Let me further share with you some positive updates about our credit ratings. India Ratings and Research has upgraded AGL's long-term issuer rating to AA- from A+, reflecting a strong operational performance, continuously improving leverage and healthy cash flows. While we've been outperforming in our operations, we continue to implement best-in-class ESG practices across the organization. Let me share with you a couple of recent milestones. Recently, AGL has been ranked third in FTSE Russell ESG assessment in the alternative electricity segment. The company has achieved the topmost score of five in the governance theme as well. AGL is also ranked among the top five renewable energy companies by ISS ESG and the top 10 by Sustainalytics.
Our latest achievements highlight our dedication to setting a blueprint for the ultra-large-scale deployment of renewable energy. By integrating innovative technologies, fostering local partnerships, and mobilizing a dedicated workforce, we're enhancing our operational efficiency and contributing to a greener future. We remain committed to lead the transition to renewable energy, creating lasting positive impacts for communities and the environment alike. Thank you, and I hand the call back to the host.
Thank you very much. We now begin the question and answer session. Anyone who wishes to ask the question, may press star and one on their touchtone 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. Participants, you may press star and one to ask a question. The first question is from the line of Puneet Gulati from HSBC. Please go ahead.
Yeah, thank you so much, and, and congratulations on good number again. My first question is, what is your expectation of exit capacity for end of FY 2025 and 2026, and, and what should be the mix between wind and solar?
Yeah. So I think by end of this year, we are, as we had guided, we will be—we are projecting 5, you know, additional 6 GW capacity, for this year, out of which we have just commissioned 250 wind, which will essentially, you know, going to become a backbone of our operations in Khavda. Going forward, majority of our operations is targeted towards, you know, solar in both Rajasthan and Khavda, but we're expecting, close to 700 MW of additional wind capacity, which will, come in, for the rest of the year.
Okay. And in this wind side, both for the 250 which is commissioned, how much of it is your own 5 MW turbine, and for 700, what is the plan?
So I think the commissioned turbines are all 5.2, and in the near future, we are focusing on that platform as well because of maximizing our, you know, you know, MUs being generated in Khavda. So, and also for other sites we are exploring, we are looking at different options, but I think for now the focus is to maximize, you know, what we have designed for Khavda specifically, as you know. You know, Khavda has a very high density of, you know, high frequent, high frequency distribution of high wind speeds, and it requires a particular kind of, you know, profile of the blade and different kind of heights and other dimensions.
So we are making sure that the engineering work we have done, the supply chain we have established, we will make sure that we accelerate our delivery performance and we deliver these numbers for this year.
Just carrying on a bit on the wind side, you know, your solar plant availability has been upwards of 99%, but wind is about 97%. So should one assume this is theoretical maximum that a wind plant can be, or, or is there room for this also to expand?
No, I think you should not look at it as a benchmark. I think, you know, these numbers, the historical numbers have been across India, where conditions are significantly different. We are very confident that, you know, the new generation capacity which is coming through, you know, in Khavda, where all the new lines are being commissioned and all the evacuation established, we are expecting a higher degree of availability around, you know, you could argue 98%-99%.
For the new turbine, go to with the CUF?
For the new turbine, I think the average CUF we are projecting in Khavda is closer to 35%.
Okay.
And Puneet, just to add to, the wind availability question again. So as you know, our wind portfolio combines capacity, site capacity ranging between 50 MW to the recently commissioned capacity of 250 MW. What we have observed with the larger mega capacity and more efficient machines which we have installed, if you will really see a breakup of plant availability now for either for 250 MW or our 325 MW or MWs, these are plant availability in excess of 98%. So we do believe that progressively, on a portfolio level, our availability will also move towards the levels which we have seen in our recently large-scale commission projects.
Understood. That's, that's very helpful. Secondly, if you can also comment upon what is the current borrowing cost that you are experiencing on the new projects?
Yeah, sure.
Okay.
So last year, we closed with an average level, portfolio level borrowing cost of 9.4%. What we are definitely will be seeing from a green perspective is there is massive appetite, both at the green field as well as refi level at multiple funds actually. What is happening is liquidity per se for green is increasing. Secondly, the risk spread, which a green portfolio is today commanding, is much lesser than what we have maybe seen in the past. So some of our fresh borrowings, which we have recently done, is at a level less than 9%. What you can say is it is between 8.6%-maybe 8.9%, which is what we are maybe doing right now.
Refi of our projects are at a level which is even lesser than maybe 8.6%.
Oh, refi is lesser than 8 point?
Yeah. So at a portfolio level, as we have guided in our last call, actually, we do expect at a portfolio level, my average portfolio interest rate to come down significantly from 9.4.
Okay. And just last bit on your merchant capacity, what is the average realization you're getting on the merchant part of the business? And is there an intent to add, you know, batteries or BESS as well onto that?
Yeah, I think, merchant pricing, you know, if you look at the last year and going forward, I think if I were to split it between solar and wind, you know, the wind pricing has been very strong. You know, we are seeing north of 5.5 price realization. So, we feel that a lot of merchant capacity is going to come on the wind side, and we'll make sure that we continue to grow that as we go. When it comes to solar, you know, we are not very, you know, bothered on spot pricing.
We have, as we have explained before, we have a lot of bilaterals, we have a lot of C&I discussions which is going on, and we are also making sure that we have where, you know, where there's a, you know, incidental seasonal mismatch. When the prices are high, we take advantage of the spot market. So we are, you know, expecting INR 4-INR 4.5 price realization for solar, which is, kind of, in the near term, we feel that will be the price for the next 2 years. And as time goes by, we will make sure that we will de-risk all our merchant portfolio with, you know, different C&I customers being the counterparty. In India, I think it is a, it's a big tailwind.
I think it was also announced in this year's budget. Our respected finance minister talked about how she's going to introduce you know efficiency and intensity-based carbon regime. This is going to unlock a new sphere of business for C&I. And we being the single largest renewable energy provider, we will directly benefit with some of these trends in the market.
So, just for clarification perspective, the current solar realization also is 4.5?
Yeah, let me maybe bring Raj in as well, Puneet.
So I think, we have seen some seasonal movements in that, and the current realization for the year average until now is around INR 4. However, this particular period of Q1 has seen, last year as well, and year last as well, some softening in prices because of the way the market works, because the more solar is available in that period. However, it will pick up as it picks up every year, as we move forward in Q2 and Q3 and later Q4. So we expect a good realization, north of 4.5 for the merchant prices as well, for the solar assets.
Q1 specifically, what number would it be?
We are around INR 4.
Four rupees.
Yeah.
Okay. And would it be fair to assume that new merchants will focus more on wind than solar?
No, I think we will, we will, optimize that mix, we'll take a call as we go. I think it's fair to say that, wind for sure. I think you will see us, making sure that we use wind resources very carefully in premium projects, because of the nature of the wind, where we have not only high generation of 35%, as I talked about, but also the time at which the wind blows in some of these locations means that we can realize very good price. So, so we are very sure that it will stay like that, when it comes to wind in premium locations. When it comes to solar, we will mix it to make sure that we service demand for our key customers.
But there will not be a vanilla solar merchant, is not how we are thinking about this.
Great! That's all. Thank you so much and have a good day.
Thank you. Next question is from the line of Sabri from Emkay Global Financial Services. Please go ahead.
Yeah, good afternoon, sir, and, congratulations on good set of numbers. So I have a, you know, few conceptual questions, firstly relating to, pumped storage. So the project that you're currently doing, I think, I mean, there is this open loop and closed loop systems where, I think which are like two different variants of pumped storage. So can you just give us, the CapEx difference between the two systems and the benefits, of the two systems? I, I remember you in a previous call, you mentioned that 4 to 4.5-4.5 to 5 crore INR per MW is the run rate. So what exactly does it refer to?
Yeah. Yeah, let me invite Raj to answer that, yeah.
I think, in our case, we said INR 4.5 crore as the cost, and that's true for what we have said for over 5,700 MW capacity. That's where the reference is, in terms of capacities. In some cases, the turbines will be submerged, in some cases, the turbines may not be submerged. We do not see that we have any anything which is open loop in a, in a, meaningful manner. But, there are advantages which we are able to have in some cases where, again, there is some geological differences there in terms of having available water, which is there already.
So all that is being done, but, the sites which we have chosen for our development, not only for this 5,700 MW, which we have guided, but for the future sites as well, we have ensured that those are among the best sites in the country in terms of, the CapEx intensity in those cases. And also has the least implication on the environmental factor, whether it is the forest or R&R and other measures, so that sites, one, can be quickly developed and also doesn't have, the meaningful impact on the ESG side.
Right. So these are like closed loop systems and, but you are still like, putting it up near a water source, for the fact that the initial water could be, like, accessed from that river. Is that right?
Yeah, yeah, yeah. Actually, there are very few cases where we have it, and we are not necessarily tapping river waters.
Yeah, I think you have to understand that in a pumped storage, you have to fill the, you know, the dam once, in the-
Right
... in the life of it, and then you can harvest rainwater or other sources of water.
Yeah.
It's not, you know, that is not a key constraint there.
Again, just to explain the point further, see, in a normal hydro plant, if you want to run that hydro plant, you need water, which can run the stuff for 8, 7, 6, 0 hours. Here, you need water, which is only 7 hours equivalent, and you just pumping and up and down that water. So that is where the disturbance to anything which happens is so, is less than 1% of what a normal hydro plant will do. And that's where some of these discussions are not necessarily relevant for PSPs. But yet, at the same time, we still optimize the site in a manner whereby some of these is taken care of.
Again, even the evaporation which happens from a pumped hydro plant is roughly 3%, which further water which we store on day one, and that 3% is easily catered through the rainfall which you have in the area. So that, again, is something you don't need, even for recharging, you don't need a source which is, say, a river or something else. It is, it is very natural.
All right, sir. Another thing is, I mean, I think today or yesterday, I think another project was announced by SJVN in, I think in Mizoram. So there also the input-output efficiency, they have cited 78%, which is also your run rate, I think 76, 77%. So it is largely established, right, that these plants will run at 75%-80% sort of efficiency, right? In terms of like the upstream power capacity versus what the pumped hydro would produce.
You're right. The bigger the height of the two water levels is what decides this efficiency. But it is broadly economical if it is anywhere between 75%-80% as a efficiency. People don't... You can have lower efficiency, but then the cost becomes higher.
Right, sir. Thank you so much for this. Just a small question regarding the SECI tenders that you have won. I mean, what could be the minimum CUF that you want to like, you have to like, deliver?
Which tender, sorry?
I mean, the SECI, I mean, whatever, I mean, it's also like the tenders which come from SECI in terms of like, the, suppose 6 GW or 8 GW that you have in the pipeline. Is there a minimum CUF requirement there?
See, generally the developer, whomsoever wins, has to give the CUF there, subject to a minimum of 19%.
Nineteen percent.
We optimize our plant configuration in a manner whereby economically it is most optimized. Okay, so we have recently guided that our plants in these SECI tenders are going to have around 33% CUF for plants which we are putting up in Khavda. However, the SECI again gives an option. The contract gives an option to the developer to revise the CUF once again within the first year, or in some cases within the first three years, once you finish the plant. So from a SECI perspective, as long as 19% is achieved, it's fine. But we need to specify a CUF. Suppose we have specified a CUF of 30%, then I need to achieve that with a range of ±10%.
Thank you. Sabri, I'll request you to come back for a follow-up question. I request all the participants, kindly restrict to two questions per participant, and join the queue again for a follow-up question. The next question is from the line of Ajay Sharma from Maybank. Please go ahead.
Yeah, hi. Can I, can I check what the, this 50 GW target which you have, so what's the total CapEx you're looking at to implement this?
I think let me—I mean, I think we have given a guidance of the total numbers, you know, for the, you mean from incremental from where we are? So we will be... You know, if you look at the total CapEx, which will be in excess of, you know, 2.4 or INR 240,000 crore, which includes pumped storage as well. So it's a, it's a big number, which we will continue to optimize and, make sure that, and, you know, we'll make sure that, you know, we, we get get the most out of this, thing. If you convert it into US dollars, it's closer to $30 billion.
Do you need to raise any equity, like QIP, to fund this?
No, I think as we had explained before, you know, the promoter warrants money is expected, and we are tapping into it as we need. So we have that, you know, already done. You know, there is, you know, the way we have designed the project, and the way our cash flows from existing project works, and the new projects will also throw in a lot of free cash flow. So it will essentially help us make sure that we fund this growth, you know, without any further equity raise or dilution, as you know, as you asked. Anything you want to add, Phuntsok?
No, nothing.
So what sort of net debt to EBITDA would you target basically? Because this is the big CapEx. I mean, can you keep your net debt to EBITDA within the covenants, basically?
Yeah, I think... Go ahead. Go ahead, Phuntsok.
Yeah, so you would have seen, for my full year actually, net debt to run rate EBITDA is nearer to four, actually. And the way my free cash flows will grow, as Amit was talking in the beginning, on top of a 10.9 GW, I will be adding 6 GW actually. And incrementally, the free cash flow it will throw, I don't expect - we don't expect net run rate, net debt to run rate EBITDA to be any way than a level, higher than what we have right now.
You have to remember that, you know, we have long tenure debt, so I think our ability to throw in free cash flow in the early phase of the project is higher than what you might be looking at the market average market participant. So, we generate a lot of free cash from our projects, and it will continue to grow because of our operating philosophy when it comes to capital management program.
... Okay, just a last question on the capacity you preferred Khavda, right? So I mean, 30 GW. So, I mean, do you have customers already in mind, or is this, I mean, is it tied to the PPAs you're expecting, and how does it work, basically?
Yeah. So this year, I think we are executing, as I said earlier in the call, a lot of our projects this year we're executing are under PPAs, which we had won a few years ago. Some of these PPAs or majority of these PPAs are the manufacturing-linked projects, and we have a very strong counterparty, some in Andhra and some in other states. We have very attractive pricing and exceptions as well, available in this project where we are able to... We have exemption from ALMM to start with, which means that we can import module from outside of India. These projects also benefit from ISTS waiver. So, and also the commissioning timelines for these projects are still ahead of us.
So we will also benefit from any pre-COD revenue, which will be generated. So, really, I think our strength of the group is scale and speed, and we will make sure that we bring these projects with a fast-track speed, so we maximize the duration of these projects and maximize the pre-COD revenue as well.
I mean, your, your current execution pipeline is up to 21 gigawatt, I believe. I'm just wondering, so how are you looking at 50 gigawatt? Like, I mean, is it based on some future wins, basically, or, I mean, because it's a large number you are targeting? I'm just wondering.
Yeah. We, we don't look at... This is the classical way of looking at things, where we only look at PPAs or we look at, you know, things we have won in the tender. Like I said earlier, our approach has now become that we want to target in 2030 at 50 GW, out of which we want to have a 15% of merchant and C&I portfolio. You know, we have been working with lenders and bankers, as you may have seen in our press release. We have also funded a lot of new capacity, into a 60/40 mix, which will allow us to commission these merchant projects, and they're already, in the pipeline. And it will allow us to maximize, our, you know, project, establishment on C&I projects or PPAs as need be.
So it will always be, you know, you know, we want to make sure that when we look at a resource, like a land bank like Khavda, where we have very high CUF of 33%, we have a very high CUF for wind. We want to make sure that we use that land resource, in the most optimal value, where we can place these resources.
Excellent. Thank you very much.
Let me have Raj add a few words as well. Raj, please go ahead.
Yeah, sure. Thanks, Amit. So I think the way, as Amit explained, the approach today is to lock in the best sites in the country. When we say best site, it is the cheapest in terms of the execution cost, the best in terms of the resources, the economics of scale which we can drive in, and the best technology which we can use, and then sweat the assets in a manner where, which are above the benchmarks and be beyond the design. So that's what, what Khavda provides to us, and that's what some of the other large-scale sites which we are, which we, which we have in Rajasthan provides us. Now, the question with respect to how do we tie?
Obviously, when I have the cheapest resource available, the opportunity, whether it is supposed to be a PPA, whether it is supposed to be a C&I customer, whether it is supposed to be a merchant, whether it is supposed to be mixed in an RTC power, FDRE power, hybrid power, all of that is something which is available to us. As we stand here today, we have close to 10 GW worth of PPAs already signed, which I'm supposed to deliver. So that flexibility is always already there with me that I can execute those PPAs if I want to, as PPAs for the next two years. As I mix more and more merchant, C&I, and other type of revenues, that obviously extends it further. And I will be very selective in my revenue tier, which maximizes my revenue.
And you have seen our track record, where we have been able to tap in one of the best revenue profiles in the industry. So that's... We continue on that strategy, and we will be delivering that. So I think the focus is more on, as I said, have the best in hand and then actually milk it to the maximum.
I think as a reminder, we have 2.5 lakh acres of land, which is, you know, if you look at the resource allocation, it's equivalent of 65+ gigawatt scale already in our access. So, we develop these, you know, and we de-risk it through evacuation to make sure that when we develop a project, we don't strand it as well, and we continue to optimize and high-grade our portfolio.
Okay, that's, yeah, that's very clear. Thank you.
Thank you. Requesting all the participants, kindly restrict to two questions per participant and join the queue again for a follow-up question. The next question is from the line of Nirav Shah from GeeCee Holdings . Please go ahead.
Yeah. Good afternoon, sir, and congratulations on a very strong set of numbers. Couple of questions. So this was the first quarter of Khavda operations, and as you've mentioned, that your CUFs there will be 33%. And being first quarter, I mean, it will be meaningfully lower because we are just in the phase of stabilization. So just want to know that, what was the broad CUFs in the first quarter, and how much time will we take to reach the optimum level?
... Yeah, I think, we should not even look at the PLF numbers, in the, you know, first quarter. I think what we need to do is, you know, Khavda is a place where we are going to be there for next several years. What we want to do is make sure that we make a operating regime which maximizes our, output. And, you know, what we have noticed that in one of the blocks where, we had commissioned earlier in the quarter, we've already started to see 33% and above PLF. That is one of the subset of the blocks, in one of the SPVs.
At a holistic level of all the commissioning which we had happened in by end of March, we are very confident that we will achieve that number, and in certain cases, slightly higher because of a very sophisticated digital approach, which we are deploying in Khavda. For some of you who have been there, you would have seen that we have put together a very modern command center there, and we will be managing operations from there and making sure that you know, this is all established. Now, going forward, what you will also see that the stabilization will also be accelerated because of the work we are doing in this space. It's looking very positive there.
Neeraj, just to be more specific on this, as far as Khavda portfolio is concerned, the CUF which we have seen even during the stabilization phase, is nearer to the portfolio CUF, which we have achieved. Now, by the end of this monetary quarter, which Amit was talking about, now these portfolios are more or less stabilized. At those levels, actually, my average portfolio CUF would have been in excess of 28%. So that is the delta which we are talking about, which Khavda portfolio will bring as a value enhancer to the overall portfolio.
Yeah.
Got it. Got it. Second question, you've just mentioned in the reply to a previous participant, that, the contract starting date for the SECI contract is at a later date, and we can benefit from infirm sales , because we'll be commissioning ahead of schedule. So what is the broad indicative period that we can get, to benefit from this advantage?
Yeah, I think before Raj gets into that, I will just give you a number on it. You would have seen my operational update, actually. 735.6 million units, mind you, I have generated, and you would have seen we have clearly indicated that there is one, just one second, 115.9 million units, which were infirm . That is the value which we are talking about. 15% of the units which I generated in last quarter pertains to project which is generated ahead of schedule, and Raj talked about what is the merchant price realization, mind you, which we are getting right now.
Yes, sure. Thanks, Phuntsok. So, I think it depends on the individual PPA, but broadly, on an average, we should be able to aim anywhere between 1.5 to 2 years of-
Yeah.
Pre-COD power. Again, it is enabled just because we are working in an environment where we have secured connectivity for 30 GW. So in lot of these cases, the connectivity, which is, designated against the PPAs, comes with, all the elements at a different time than what we have been able to accelerate as with the, commissioning of the plant. So we will have this data available, within our portfolio, which will enhance the returns for the, project which we are seeing.
Thank you. Nirav, I'll request you to come back for a follow-up question. Requesting all the participants to restrict to two questions per participant. Next question is from the line of Nikhil Nigania from AB Bernstein. Please go ahead.
Yeah, hi. Thank you for taking my question. My question is just a reclassification, firstly, on the short-term market sale. So, am I correct to understand 15% of volume sold in the last quarter on the short-term market, or was it a higher number? And what was the contribution of that in the revenues as well?
Yeah. So, if you see out of 7,356 million units, actually, 1,159, what pertains to those PPA projects where we commission ahead of schedule, then there is additional 434 million units actually, which were contributing from 550 MW of merchant project, which we have as a part of my portfolio. So if you see out of, the units which I generated, nearly 21% is from, is from market exposure on the projects. From a, from a revenue market perspective, the contribution should be nearer to 30%, actually.
I just want to highlight one point here. The good part is the pre-COD power provides you an option whereby you are able to sell that energy in the market, and you get the significant value kicker for those PPAs. At the same time, in terms of risk, those will fall under normal COD projects after the COD is achieved for all the transmission elements. So it's a perfect mix whereby we are able to enhance the revenue from the executed PPAs. Just adding another point there: so like for 7,000 out of our manufacturing capacity contract PPAs, out of that 7,000 MW, for close to 16%, I have a perennial merchant exposure.
In the sense that those, close to 1,100 MW to 1,200 MW worth of capacity, despite having a PPA, we have an inbuilt provision to be able to sell that in the merchant market. So that's an additional kicker in those, those contracts, which adds significant value to the company.
Understood. Just for one clarification, then, we are able to sell it on the merchant market, the infirm power, because the evacuation is not ready at the customer end. Is that the primary reason, or just because we are ahead of schedule or the LD date, we are allowed to do that?
...No, no, we are ahead of schedule by a significant margin. So last year, 2,000 MW project, which we have implemented, are ahead of schedule just by contract between one year to two years. At the same time, the transmission elements also provide some more flexibility within that time period.
Understood. Got it. Thank you. My second question then is just, I'm not sure if I read it correct in the notes. The convertible debenture from TotalEnergies, I think, which was invested quite some time back. Has there been any change in that debenture per se, the fixed coupon debenture which Total had invested some time back?
No, actually, I think this you may be referring to Q3 event actually, where when we set up this new platform with Total, as a part of that platform, the stapled instrument which we had in the past was complete, was converted into a compulsory convertible debenture. So that, okay, the stapled instruments from accounting purpose was getting treated as a debt instrument. Just to make it absolutely clear, because the intent between both the partners were very clear that stapled instruments were nothing but a equity instrument. From an accounting purpose, to have that clarity, those stapled instruments were converted into CCD. But that was a Q3 last financial year event. Nothing has happened post that, actually.
Okay, totally with that. But the coupon, do we still give the coupon on that? I think the 12.30% coupon or
No, no, we don't give it actually. Since, as I said, even under the intention of staple was to as if it should be treated as a equity. So from a CCD perspective, there is no obligation to pay the coupon.
Okay, understood. And even the JV investment which Total has done, that is a debenture. Am I correct to understand that, the JV which came in, investment which came in last year?
Absolutely. It is exactly in the form of CCD. Within the partner now there is absolute clarity that risk reward should be shared equally between the partner or to the extent of their shareholding, and your accounting treatment should also reflect that.
Thank you, Nikhil. Kindly join the queue for a follow-up question. Next question is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Good afternoon. Couple of questions. Of the six-
Sumit, sorry to interrupt you. Can you speak through the handset, please?
Yeah. Is this better?
Yes. Thank you.
Yeah. Of the 6 GW capacity that will get added through FY 2025, just want to understand at the end of the fiscal, what proportion of the total installed capacity would end up being merchant plus C&I? And maybe even two years out, if you could sort of give us a sense of what proportion would you be keeping in merchant plus C&I. The second question would be, you know, on the roadmap going forward for carbon markets and what role Adani Green would you know have there, and how would that be adding to your cash flow stream?
Yeah, let me ask Raj to answer the first one, and I'll comment on the second one. Go ahead, Raj.
So, out of the six which we are adding, close to 1,800 odd MW would be merchant, which is predominantly wind. So 1,000 MW out of that is wind, out of which 250 we have already done. Then, on a mixed basis, already we have some 550 MW operational merchant. Again, that is predominantly wind. 350 MW out of that is wind and 200 solar. So from a split perspective, we are talking about close to 1,400 odd MW of wind and balance being merchant, out of roughly 2,400 in total by end of this year, as a merchant. And this is out of a capacity of roughly 17 GW.
Yeah. So I think, on the second thing you asked, look, I think, the carbon CBAM rules are now in, in, in practice in Europe. And if you look at some of the policy updates which are coming from their government, they're also looking to update some kind of a carbon mechanism in India. And, you know, there's a lot of incentives being put together for industries who are hard to abate sectors or high, you know, power consume, consumers or energy consumers to decarbonize themselves. And, what that does is that drives a lot of, you know, growth for C&I discussions, C&I transactions.
And not only you know, you know, classical industries like steel and cement, but also you probably know the trend in AI and lot of data centers which are opening up in India, are also looking to have a long-term supply of green electrons. So, us as a renewable energy provider, and also combining it with pumped storage and where needed, battery systems, we can produce a very high CUF, and very high firm power for our customers, and that directly benefits in terms of locking in this premium pricing. Now, also, a lot of our projects today are registered under the Gold Standard and Verra, which were commissioned a few years ago.
Also we continue to look at the current and new carbon UNFCCC regime, where we register these projects, and we also benefit from carbon credit sales as well. And the third dimension is the RECs, which are generated when we do a green or a day-ahead market sale. And these RECs also get transacted, and customers acquire them. And we have bilateral discussions where they want to decarbonize and achieve their own net zero goals. All of this is underpinned by a very strong enforcement by the government on the carbon efficiency program, the RPO obligations of DISCOMs in states, and a lot of other things which are being driven, you know, in response to the climate action.
Sure. What would be your current backlog of REC that is unsold?
I think these numbers won't be able to share openly, but you know, we have you know put together and we have some signed up with customers at attractive pricing over long term. And yeah, and I think this... The other thing you will know is that the BEE has enforced RPO obligations, and there are quite a strong penal action if you don't meet them by end of the financial year 2025. So we're also expecting that some of the RECs unit price will continue to rise as we get closer to that date and beyond.
Sure. Thank you so much for answering my question.
Thank you. Next question is from the line of Dhruv Muchhal from HDFC Asset Management. Please go ahead.
Yeah, thank you. Probably a question to Raj, his response earlier. So you mentioned 1,800 MW would be merchant, of which 1,000 would be wind. So 800 MW merchant solar, of the total 5,000 MW that you're planning to commission this year. But this 800 is pure, pure merchant. There would be also the pre-commissioning, the pre-COD, you know, projects that would be there, right? Or this is only, I mean, this captures everything. 800 captures the merchant plus the pre-commissioning ones.
No, no, no. So it, the entire capacity which we have, which we are commissioning this year, will have that pre-commissioning opportunity in terms of being able to realize through multiple means. So we obviously continue to place power in a manner where we maximize the revenue, but in the entire capacity which we are commissioning this year, nearly for all, I will have that pre-commission power.
And, Dhruv, I think, as a part of portfolio, we have given a guidance that 15% of my portfolio will be merchant actually. And if you see by the end of this financial year, we are talking about 17,000 MW, and if you take 15% of that, that is 2,550. If you do a math, actually, this will make it absolutely clear. Right now, I have 550 MW of... I ended with 550 MW of operational merchant project in last financial year. I commissioned 250 MW, day before yesterday, which is a part of 18,000 MW, which Raj was talking about.
Sure. And just on the strategy of, probably just to get it better. So I understand the benefit of wind merchant, but just trying to understand the solar merchant better. So even in the peak times, the summer times, we saw that merchant tariffs, at least on the exchanges, were about INR 2.5 or INR 3. And probably, assuming that India, you know, commissions about 25, 30 or even higher, at least the government is targeting, capacities of solar, probably the merchant prices will fall even further during that, you know, time when the solar is generating. So how do you maximize benefit from this, merchant sales of solar power?
Let me maybe explain to you the context a little bit. See, a lot of you know, the ISTS waivers will come into play from June '25 . And ISTS cost, if you look at a peer-to-peer comparison of an electron being generated in, let's say, Khavda, in one of these merchant projects, and you compare that electron in, for sake of discussion, Bihar or Northeast India, there is at least a INR 1+ difference of you know, delta. So this by itself, kind of gives a tailwind support on our merchant contracts for the duration of the project.
Second, I think when we look at, like I explained to you, we have a very, very good pipeline of C&I deals, which we are working on, which will not only require wind, but will require different combination of solar as well for daytime. And our customers are looking at, you know, some kind of a firm power with very high CUF. So we will combine some of this, solar power and make sure that we, deliver on those, contracts. So, like, like you also, talked about, I think when you look at just in the slice of time, in the daytime, the pricing is weak.
But when you look at over a long period of time, and you're combining it with other things like the pumped storage , we also are de-risking ourselves by opening up an arbitrage between daytime price and evening price. So as you know that in 2030, we are projecting around 15% of our capacity with pumped storage , which means that we will have 5.5 ± GW of pumped storage capacity. And you know, we will be able to convert the solar MUs into evening as well.
So we have de-risked our portfolio, making sure that, you know, we have a good mix between solar and wind and pumped storage, and we are able to then monetize as per the demand of the grid, the customers, and the PPAs, which we have line of sight on.
All right. Interesting. Thank you. That's, that's helpful. Thanks a lot.
Thank you. Next follow-up question is from the line of Ketan Jain from Avendus Spark. Please go ahead.
Thank you, sir. My question is on the pumped storage thing. You mentioned the CapEx for us is around INR 4-5 crores per megawatt. I just want to understand, some of the peers have the CapEx around at INR 8-10 crores. What makes it lesser for us? Is it the site? Is it because of the site location? And can you give me the split between the civil and equipment of the INR 5 crores CapEx? And also, are we doing the EPC on our own, or is it outsourced?
Yeah. So I think, two, three points. What we understand, the industry benchmark is anywhere between INR 5.5 crores-INR 6 crores per megawatt. Cannot talk about where this eight is. If there is someone who is doing at eight, needs to relook at that. Number two, in terms of the, breakup, it depends on the site, but anywhere between, the ratio moves between 45%-55% between the civil and the, the equipment. But again, as I said, it depends on site to site, depending upon whether you need to have both sites' civil work or, only, one of the sites and the other site is more enhancements or, number... What was the last question?
EPC, are we doing it on our own?
Uh, yes.
Yeah.
So we have divided the work into multiple contracts, whether it is some equipment supply contracts. So, for Chitravathi, like, the equipment is coming from one supplier. The civil part again has been divided into more than one contract, and that is being done that way. Obviously, as a group, we do our own project management and assurance. So that is the way it is happening. But it is something which we evolve as we move in the sector. And I think, as we move further into some of these future projects, we will be able to have more packages to have more control over the time, quality, and the cost for these projects.
Understood. And, the equipment is localized or is it imported, sir?
I think I can come back to you on that. The supplier is not from India.
Yeah, I think, yeah, we won't be able to openly discuss it. I think we're still finalizing some of these things, for our ongoing projects, but I think, yeah.
Understood. So my last question is on the recent import duty on solar glass, which the government has put. Is this going to impact us, like, are we - were we importing the solar glass, or are we going to again now procure it locally?
No, look, I think we're not in manufacturing, and I think some of these changes will be reflected in the pricing. But, long term, we're expecting the price of module and cell to come down. And, you know, that quite a few of our PPAs benefit from, you know, we can import from outside India, so we have that option, available to us in several other projects over the next year or two. So we are not directly impacted by this change, which was announced a couple of days ago. But, listen, I think in India, we need a domestic supply chain. We need to localize the economy, so we very much support the move which has happened.
We are very confident that over a period of time, this is only going to reduce the cost, and bring down our CapEx cost as well over a long period of time.
Oh, understood. Thank you. Thank you, and all the best.
Thank you.
Thank you.
Next follow-up question is from the line of Ajay Sharma from Maybank. Please go ahead.
Yeah, hi. Can I check, what sort of tariff are you expecting for the pumped storage projects?
I think pumped storage projects, as I explained earlier, I think we're not looking at purely just putting the pumped storage on a long-term contract only. We will have a combination of approaches. We will, you know, for example, a baseline, if you look at, is around, you know, INR 3.8-INR 4.5 plus, when you look at, what's happening in the market. But our approach is going to be to combine it with solar and wind, and also use it for the C&I projects, which we are working on, where, again, the pricing which you will realize is going to be higher when we combine with, you know, for the customers.
Now, I think, if you look at our mix of 5.5, we will make sure that, you know, close to 60%-70% is on long-term agreements, and we will look to see if we can create an opportunity for us to maximize returns for the rest of that capacity. But we will give more color on this as time goes by. I think right now we are focused on executing these projects, making sure that we have this capacity available to us. We're not in a rush to tie up. We have already secured financing, so we are not necessarily looking to put these projects on any kind of low-cost regime as well. So, it's going to become our, you know, upside opportunity in this decade.
I think we've kind of run out of time as well. So, absolutely, great discussion today, and it would be maybe pass it back to Viral.
Thanks a lot, everyone, for joining this call today. We'll be happy to connect in person with you if you have any further questions. Thank you all. Thank you, Mohit and ICICI Securities team, for arranging this call. Thanks a lot. Bye.
Thank you very much. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.