Acme Solar Holdings Limited, which has made a sharp pivot to a BESS heavy portfolio over the past few months, came out with a strong set of results for Q2, Fy 26.  Post results, the maagement led by Manoj Upadhyay, Chairman and Managing Director, along with Nikhil Dhingra, CEO and his team handled analyst queries on the future for the firm. We have quoted them extensively here, without attributing specific quotes to them for the sake of brevity.

Guidance Versus Achievement

 Acme had made an execution guidance for FY26 to commission 450 megawatts of renewable energy capacity, of which the firm claims to have commissioned 378 megawatts capacity till date, with the balance 72 megawatts under  advanced stages of construction. In addition to its earlier guidance, the firm plans to approximately operate one gigawatt hour of  battery energy storage system on merchant from Q4 FY26 onwards, which is expected to give  an upside potential of annual EBITDA of around INR 170 crores, assuming price difference of  INR 5 between merchant power saving during peak hours and cost of producing the same. With recent commissioning, its operational portfolio now stands at around 2,918 megawatts,  capable of delivering an annual steady state project level EBITDA of INR 2,025 to INR 2,075  crores, and an EBITDA yield of around 14%-15%.

After accounting for recent bids won, the firms total portfolio currently stands at around 7,390 megawatt, including 13.5  gigawatt hour of BESS capacity and 5,180 megawatt of PPA signed capacity. It has also  placed new orders for 2 gigawatt hour BESS with global suppliers this quarter taking its total BESS orders to 5.1 gigawatt hour till date, most of which is expected to get installed in a phased  manner starting in Q4 FY‘26. 

A key benefit achievement highlighted by the team was the reduction in days of sales outstanding, which  has dropped to a low of 27 days as the proportion of central offtake has increased in Acme's operational portfolio, giving it more headroom to borrow for projects over day to day operations. 

On Pending PPAs and PSAs

Acme's management was hopeful of acceleration on reducing the pending backlog of projects that are awaiting offtakers. Highlghting how projects coming up in a shorter timeline  would have the benefit of both 100% ISTS waiver as well as the benefit of ALCM exemption. The firm was confident that its own key projects it had won recently, the financual case was compelling enough to make for faster signing and execution.  It has won 720 megawatt capacity, comprising a 50 megawatt FDRE with Tata Power and 670 megawatt solar  plus BESS, thus extending its  under construction portfolio to around 4.5 gigawatt, which includes the signed PPA capacity of 2.3 gigawatts.  
Both these solar and BESS projects, which is 220 megawatt  RUMSL, Morena, and 450 megawatt with SJVN, represent distinctive opportunities with strong strategic and financial merits, that will ensure execution progress, in their view. 

 The management expressed optimism about the potential in its BESS pivot, highlighting that currently the firm has dual incentives to accelerate BESS capex and installtions. A contractual reason cited was that it would allow the firm to capture the arbitrage between the peak power prices and the solar prices  prevailing currently. So, you can use solar to charge or lower rates to charge the batteries and sell it on the power exchanges as a merchant supplier.With the capex being below the range targeted while bidding for these projects. On the technical side, with a recetly commissioned 10 GWh pilot battery and learnings from there, besides experience operating a battery within the group for its Green Ammonia project for the last four or five years has given the firm enough confidence to know how to sweat its battery assets better. 

Policy Tailwinds

Acme management highlighted the positive impact of policy mives like the lower GST on equipment that would support lower prices for green energy. Secondly, the replacement of renewable energy purchase obligations (RPO) with a renewable energy consumption obligation with a wider compliance base prescribed for designated  consumers like Discom, Open Access, and captive users was seen as a key positive, as it sets out a progressive consumption  target to achieve a minimum of at least 43% RE consumption by 2030. This will again positively .

On the regulatory side, the CERC's notification of the third amendment of connectivity and GNA  regulations, wherein it introduced the concept of solar and non solar access to accommodate battery energy storage system in the grid is seen as a big positive. This is aimed at  managing the intermittent nature of solar and wind power while maintaining grid stability. This  amendment particularly allows for all 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. 

Finally, the  Supreme Court order on liquidation of regulatory assets within four years, while taking note of around INR1.5 lakh crores of regulatory assets across state discoms, is seen to be adding much needed discipline to tariffs and pricing.  The likely impact on the overall sector due to more realistic pricing and lower outstandings would benefit the whole ecosystem of firms involved. 

The Financing Kicker

The firm has been refinancing most of its debts for a tenure of 20 years average at a taregetd rate of 8%. With most debt tied to MCLR plus 10 basis points spread, the firm is hopeful of capturing any future rate reductions as well.