Adani Green’s Q2 Analyst Call Highlights

Adani Green Energy Limited, the main vehicle leading the group’s green energy push as a developer held it’s analyst call on October 29, shortly after its Q2 results were declared. While the results highlighted the strong growth, as well as the closure of the 5 GW SB Energy deal, starting up of PPA’s under the manufacturing linked scheme with SECI etc, we highlight some of the other interesting nugget from the analyst call. Coming from the leading green energy firm in the country right now, with a declared ambition to reach 25 GW of capacity by 2025 well within reach already, we believe readers will find the management views useful on the sector. The analyst questions were responded to by the firm’s CEO and MD, Vneet S Jaain, and Kaushal Shah, CFO.

On the global advocacy front, Adani Green Energy Limited (AGEL) has become founding member of the ‘Global Alliance on Sustainable Energy’ joining hands with the several other large global players committed for the growth of renewable energy. Adani Green Energy Limited (AGEL) has also signed the UN Energy compact for alignment with SDG-7 i.e. ‘Clean and Affordable Energy’. AGEL has also joined CDP’s ‘The Science Based Targets Initiative Incubator Project’ in order to advance its SBTi commitment.

On the SB Energy portfolio, the firm expects got 1,700 megawatt of operational assets. Around 400 MW are expected to be completed by the end of this financial year/ by March 22 and, for the remaining, there are certain projects in the portfolio for which the commissioning as per the PPA are in FY 22-23 and a few may spill over to FY 23-24. All in all, AGEL expects to have 7500-8000 MW of total operational assets by FY22 end. These will include the 1.7 GW Hybrid projects that the firm expects to commission by February 2022.

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On the manufacturing linked tenders, where the firm has to sign PPA’s worth 8 GW with SECI overall, it has made a start finally with PPA of around 867 megawatt which consists of Chhattisgarh 200 megawatt and Tamil Nadu 667 megawatt. On the lower PPA cost of Rs 2.54 versus the winning bid of Rs 2.92, the firm believes it should be able to maintain returns owing to the adoption of technology improvements in modules since 2019, when the bid was won.  Claiming no communication from SECI with regards to reports of Andhra Government deals for the same happening at Rs 2.42, the firm has chosen to wait and get formal communication.

In FY 23, the firm has projected commissioning of 3500 to 4000 MW of fresh capacity. Of course, this is also the  year when it will cross the 10 GW milestone for operational assets in India.

While the firm claims to have tied up most of its module purchases for projects scheduled for FY 2022, it is waiting out the price volatility of recent months to place orders for projects scheduled for FY23. It also claimed that based on inputs, it expects to revert back to lower levels from January next year, from the current 26 cents a watt. The firm has limited the impact of higher prices with the lower borrowing costs since 2020 up to a point.

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The firm made it clear that it will continue to bid in the renewables space, including thermal+ renewable RTC tenders where the renewable component is 51% or higher.