Adani Green Energy Ltd

NSE:ADANIGREEN

Earnings Call Analysis

Adani Green Shows Strong Growth and Future Plans

Adani Green's Q1 FY '25 earnings call revealed significant achievements and clear future strategies. The company increased its revenue from power supply by 24% year-on-year to INR 2,528 crore, and EBITDA margins reached 92.6%. Operational capacity hit 11.2 GW, bolstered by a new 250 MW wind power addition at Khavda. By 2030, Adani Green aims for 50 GW capacity, emphasizing advanced technology and local supply chains. Additionally, their commitment to ESG practices has earned them top rankings. Future projections include an additional 6 GW capacity for FY '25, with increasing merchant and C&I segments enhancing financial returns.

Operational and Financial Performance

Adani Green Energy Limited (AGEL) is on a robust growth trajectory, aiming to reach a capacity target of 50 gigawatts by 2030, including 5 gigawatts of energy storage through pump hydro. The company is developing the world's largest single-location renewable energy plant of 30 gigawatts at Khavda in Gujarat. This growth is underpinned by the adoption of advanced robotics technology for solar module installation, a strengthened local supply chain, and sustained mobilization of human resources in both Khavda and Rajasthan.

Recent Achievements

Recently, AGEL operationalized a 250-megawatt wind power capacity at Khavda, which includes India’s largest onshore wind turbine generator (5.2 megawatts). The operational capacity at Khavda now stands at 2.25 gigawatts, combining both solar and wind sources. This boosts AGEL's total operational portfolio in India to 11.2 gigawatts.

Financial Highlights

In Q1 FY '25, AGEL saw a revenue increase from power supply by 24% year-on-year to INR 2,528 crores. EBITDA from power supply also grew by 23% to INR 2,374 crores, with an industry-leading EBITDA margin of 92.6%. This exceptional margin is driven by tech-enabled operations and maintenance, expected to improve further with AI and ML integration. The cash profit increased by 32% to INR 1,390 crores .

Energy Sales and Efficiency

Energy sales have increased by 22% to 7,356 million units. AGEL continues to generate significantly higher electricity than the commitments under power purchase agreements (PPAs), exceeding PPA commitments by 31% in Q1 '25.

Credit Ratings and ESG Performance

India Ratings and Research has upgraded AGEL's long-term issuer rating to AA- from A+, reflecting strong operational performance, improving leverage, and healthy cash flows. AGEL has been recognized for its ESG practices, ranking third in FTSE Russel ESG assessment in the alternative electricity segment and among the top renewable energy companies by ISS ESG and Sustainalytics .

Capital Expenditure and Funding

To achieve its ambitious 50-gigawatt capacity target by 2030, AGEL is looking at a total CapEx of INR 240,000 crores (approximately $30 billion). The company plans to fund this growth through existing cash flows and promoter warrants, with no need for additional equity raises or dilution. The company aims to maintain a net debt-to-EBITDA ratio within current covenants, leveraging long-tenured debt and robust free cash flows.

Merchant and C&I Portfolio Strategy

AGEL plans to have a 15% merchant and commercial & industrial (C&I) portfolio by 2030. The current mix includes significant merchant capacities in both solar and wind. For instance, the new wind capacities are projected to achieve a capacity utilization factor (CUF) of around 35%, optimizing resources and maximizing output.

Future Outlook

AGEL is well-positioned to lead the renewable energy transition in India, supported by innovative technologies, local partnerships, and a dedicated workforce. The company continues to evolve its strategy to maximize revenue, optimize capacity, and maintain industry-leading margins, ensuring sustainable growth and positive environmental impact.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to Adani Green Energy Limited Q1 FY '25 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Kumar from ICICI Securities. Thank you, and over to you, sir.

[Mohit Kumar, analyst]

Thank you, Neerav. Good afternoon. On behalf of ICICI Securities, we welcome you all to Q1 FY '25 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.

[Viral Raval, executive]

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. 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 the Investor Relations. So without further ado, we can begin the call with opening remarks by Amit. Thank you.

[Amit Singh, executive]

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 gigawatt, including at least 5 gigawatt of energy storage through pump hydro. With secured 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 gigawatts at Khavda in Gujarat. In order to accelerate execution, we have taken 3 key steps: Deployed advanced robotics technology for the installation of solar modules, which significantly enhances worker productivity. We have developed an extensive local supply chain, supporting our execution and contributing to local economic growth.

We've 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-megawatt at Khavda. The plant is equipped with India's largest and one of the world's most powerful onshore wind turbine generator, 5.2 megawatt 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 operational capacity at Khavda to 2.25 gigawatts, combining solar and wind sources. It further strengthens AGEL's leadership in India with a total operational portfolio of 11.2 gigawatt.

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 crores. Our EBITDA from Power Supply increased by 23% to INR 2,374 crores, 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 crores. This strong financial performance is underpinned by a robust capacity addition of 2.6 gigawatts over the past year. Energy sales has continued to increase by 22% to 7,356 million units. Notably, AGEL has consistently generated significantly higher electricity than the commitments under power purchase agreements. In financial year '24, actual generation exceeded PPA commitments by 11%. In Q1 '25, 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 AGEL's long-term issuer rating to AA- from A+, reflecting our 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, AGEL has been ranked third in FTSE Russel ESG assessment in the alternative electricity segment. The company has achieved the topmost score of 5 in the governance team as well.

AGEL is also ranked among the top 5 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.

[Operator]

[Operator Instructions] The first question is from the line of Puneet Gulati from HSBC.

[Puneet Gulati, analyst]

Congratulations on good numbers again. My first question is, what is your expectation of exit capacity for end of FY '25 and '26 and what should be the mix between wind and solar?

[Amit Singh, executive]

Yes. So I think by end of this year, as we had guided, we will be -- we are projecting additional 6 gigawatt capacity for this year, out of which we have just commissioned 250 wind, which will essentially going to become a backbone of our operations in Khavda. Going forward, a majority of our operations is targeted towards solar in both Rajasthan and Khavda, but we're expecting close to 700 megawatts of additional wind capacity, which will come in for the rest of the year.

[Puneet Gulati, analyst]

Okay. And in this wind side, both for the 250, which is commissioned, how much of it is your all 5 megawatt turbine and for 700, what is the plan?

[Amit Singh, executive]

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 -- amuse 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 what we have designed for Khavda specifically, as you know. Khavda has a very high density of high frequency distribution of high-wind speeds. And it requires a particular kind of 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.

[Puneet Gulati, analyst]

Okay. Just carrying on a bit on the wind side, 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 pass can be? Or is there room for this also to extend?

[Amit Singh, executive]

No. I think you should not look at it as a benchmark. I think these numbers -- the historical numbers have been across the India where conditions are significantly different. We are very confident that the new generation capacity, which is coming through 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 could argue, 98% to 99%.

[Puneet Gulati, analyst]

And for the new turbine, what would be the CUF?

[Amit Singh, executive]

For the new turbine, I think the average CUF we are projecting in Khavda is closer to 35%.

[Phuntsok Wangyal, executive]

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-megawatt to the recently commissioned capacity of 250 megawatts. What we have observed as with the larger capacity and more efficient machines, which we have installed, if you really see a breakup of plant availability now for -- either for 250-megawatt or our 325-megawatt at MP. 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 commissioned projects.

[Puneet Gulati, analyst]

Understood. That's very helpful. Secondly, if you can also comment upon what is the current borrowing cost that you are experiencing for the new projects?

[Phuntsok Wangyal, executive]

Yes. Sure. So last year, we closed with an average level, portfolio level borrowing cost of 9.4%. What we are definitely seeing from a green perspective is there is massive appetite both at the greenfield as well as the refi level at multiple fronts actually. What is happening is liquidity per se for green is increasing. Secondly, the risk spread which is green portfolio is today commanding is much lesser than what we have 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 see is it is between 8.6% to 8.9%, which is what we are doing right now. Refi of our projects are at a level which is even lesser than 8.6%.

[Puneet Gulati, analyst]

Refi is lesser than 8.6%.

[Phuntsok Wangyal, executive]

Yes. 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%.

[Puneet Gulati, analyst]

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 batteries or BSS as well on to that?

[Amit Singh, executive]

Yes. I think the merchant pricing, if you look at the last year and going forward, I think if I were to split it between solar and wind, the wind pricing has been very strong. We are seeing north of INR 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, we are not very 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 there's incidental seasonal mismatch when the prices are high, we take advantage of the spot market.

So we are 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 few years. And as time goes by, we will make sure that we will derisk all our merchant portfolio with different C&I customers being the counterparty. In India, I think it is a tailwind. I think it was also announced in this year's budget. Our respected finance minister talked about how she's going to introduce 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.

[Puneet Gulati, analyst]

So just from a clarification perspective, the current solar realization also is INR 4.5?

[Amit Singh, executive]

Yes. Let me bring Raj in as well, Puneet.

[Raj Jain, executive]

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 the year last as well, some softening in prices because of the way the market works because 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 INR 4.5 for the merchant prices as well for the solar assets.

[Puneet Gulati, analyst]

In Q1, specifically, what number would it be?

[Raj Jain, executive]

We are around INR 4.

[Puneet Gulati, analyst]

INR 4, okay. And would it be fair to assume that new merchants will focus more on wind than solar?

[Amit Singh, executive]

No, I think 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 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. So -- but there will not be a vanilla solar merchant is not how we are thinking about this.

[Operator]

Next question is from the line of Sabri from Emkay Global.

[Sabri Hazarika, analyst]

Congratulations on good set of numbers. So I have a few conceptual questions. Firstly, relating to pump 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 2 different variants of pump storage. So can you just give us the CapEx difference between the 2 systems and the benefits of the 2 systems? I remember you in the previous call, you have mentioned that INR 4 crores to INR 4.5 crores -- INR 4.5 crores to INR 5 crores per megawatt is the run rate. So what exactly does it refer to?

[Amit Singh, executive]

Yes, let me invite Raj to answer that, yes?

[Raj Jain, executive]

I think in our case, we said INR 4.5 crores as the cost, and that's true for what we have said for our 5,700 megawatt capacity. And 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 anything which is open loop 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 site which we have chosen for our development, not only for this 5,700 megawatts, which we have guided, but for the future sites as well, we have ensured that those are one of 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.

[Sabri Hazarika, analyst]

Right. So sir, 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 access from that river. Is that right?

[Raj Jain, executive]

Yes, yes, yes. Actually, there are very few cases where we have it, and we are not necessarily tapping river waters.

[Amit Singh, executive]

Yes. I think you have to understand that in a pump storage, you have to fill the dam once in the life of it. And then you can harvest rainwater or other sources of water. So it's not -- that is not a key constraint there.

[Raj Jain, executive]

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 staff for 8,760 hours. Here, you need water, which is only 7 hours equivalent and you're just pumping 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. Yet, at the same time, we still optimize the sites in a manner whereby some of these is taken care of. Again, even the evaporation which happened from a hydro -- pump hydro plant is roughly 3%, which -- for the water which we store on day 1 and that 3% is easily catered through the rainfall which you have in the area. So that, again, is something you don't -- even for recharging, you do need a source, which is, say, a river or something else. It is very natural.

[Sabri Hazarika, analyst]

Right. Sir, and another thing is, I mean, I think today or yesterday, I think another project was announced by SJVN 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 gets largely established right that these plants will run at 75%, 80% sort of efficiency, right, in terms of like the outstream power capacity versus what the pump hydro would produce?

[Raj Jain, executive]

You're right. The bigger -- the height of the 2 water levels is what decides this efficiency. So -- but it is broadly economical if it is anywhere between 75% to 80% as an efficiency. People don't -- you can have lower efficiency, but then the cost becomes higher.

[Sabri Hazarika, analyst]

Right, sir. And just a small question regarding the SECI tenders that you have won. So I mean, is the -- what could be the minimum CUF that you want to like -- you have to like deliver?

[Raj Jain, executive]

Which tender, sorry?

[Sabri Hazarika, analyst]

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 gigawatt or 8 gigawatt that you have in the pipeline, is there a minimum CUF requirement there?

[Raj Jain, executive]

See, generally, the developer whomsoever wins has to give the CUF there just to a minimum of 19%. And then -- so we optimize our plant configuration in a manner whereby economically, it is most optimized, okay? So we have recently guided that our plant 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 3 years once you finish the plant. So from a SECI perspective as long as 19% achieved is 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 plus/minus 10%.

[Operator]

[Operator Instructions] The next question is from the line of Ajay Sharma from Maybank.

[Ajay Sharma, analyst]

Can I check the -- this 50 gigawatt target which you have. So what's the total CapEx you're looking at to implement this?

[Amit Singh, executive]

I think let me -- I mean, I think we have given a guidance of the total numbers for the -- you mean from incremental from where we are. So we will be -- if you look at the total CapEx, which will be in excess of 2.4 -- or INR 240,000 crores, which includes pump storage as well. So it's a big number, which we will continue to optimize and make sure that -- and we'll make sure that we get the most out of this thing. If you convert it into U.S. dollars, it's closer to $30 billion.

[Ajay Sharma, analyst]

And do you need to raise any equity like purely to fund this?

[Amit Singh, executive]

No, I think as we had explained before, the promoter warrants money is expected, and we are tapping into it as we need. So we have that already done. There is -- 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 without any further equity raise or dilution as you asked. Anything you want to add, Phuntsok?

[Phuntsok Wangyal, executive]

No, I think we are good.

[Ajay Sharma, analyst]

And so what sort of net debt to EBITDA would you target basically because this is a big CapEx. I mean can you keep your net debt-to-EBITDA within the covenants basically?

[Amit Singh, executive]

Yes. I think -- go ahead. Go ahead, Phuntsok.

[Phuntsok Wangyal, executive]

Yes. So you would have seen for my full year actually, net debt to run rate EBITDA is nearer to 24% actually. And the way my free cash flows will grow, as Amit was talking in the beginning, on the top of the 10.9 gigawatt I will be adding 6 gigawatt actually. And incrementally, the free cash flow it will throw I don't expect -- we don't expect net debt to run rate EBITDA to be anywhere on like a level higher than what we have right now.

[Amit Singh, executive]

And you have to remember that we have long-tenured 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.

[Ajay Sharma, analyst]

Okay. Just a last question on the capacity bit with Khavda. So I mean, 30 gigawatt. 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?

[Amit Singh, executive]

Yes. 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. And 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 time lines 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.

[Ajay Sharma, analyst]

So I mean your current execution pipeline is up to 21 gigawatt, I believe. I'm just wondering so how you're 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...

[Amit Singh, executive]

Yes. We don't look at -- this is the classical way of looking at things where we only look at PPAs or we look at things we have won in the tender. Like I said earlier, our approach has now become that we want to target in 2030, a 50 gigawatt, out of which we want to have a 15% of merchant and C&I portfolio. 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 project establishment on C&I projects or PPAs as need be. So it will always be -- 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 of wind, we want to make sure that we use that land resource in the most optimal value where we can place these resources. Let me have Raj add a few words as well. Raj, please go ahead.

[Raj Jain, executive]

Yes, 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 thrive in and the best technology which we can use and then strand the effect in a manner where -- which are above the benchmarks and beyond the design. So that's what Khavda provides to us, and that's what some of the other large-scale sites, which we have in Rajasthan provide us. Now the question with respect to how do we tie up?

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 gigawatt worth of PPAs already signed, which I'm supposed to deliver. So that flexibility is already there with me that I can execute those PPAs if I want to add PPAs for the next 2 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 tie-up 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 -- we continue on that strategy, and we will be delivering that. So I think the focus is more on, as I said, is have best in hand and then actually milk it to the maximum.

[Amit Singh, executive]

And I think as a reminder, we have 2.5 lakh acres of land, which is if you look at the resource allocation, it's equivalent of 65-plus gigawatt scale already in our access. So we develop these -- and we derisk 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.

[Operator]

[Operator Instructions] The next question is from the line of Nirav Shah from Geecee Holdings.

[Nirav Shah, analyst]

Congratulations on a very strong set of numbers. A couple of questions. Sir, this was the first quarter of Khavda operations. And as you've mentioned that your PLFs 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 PLFs in the first quarter? And how much time will we take to reach the optimum level?

[Amit Singh, executive]

Yes, I think we should not even look at the PLF numbers in the first quarter. I think what we need to do is 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 an operating regime which maximizes our output. And what we have noticed that in one of the blocks where we had commissioned earlier in the quarter, we have 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 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. So it's looking very positive there.

[Phuntsok Wangyal, executive]

And Niraj (sic) [ Nirav ], 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 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.

[Amit Singh, executive]

Yes.

[Nirav Shah, analyst]

Got it. Got it. Second question, you 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 informed sales because you'll be commissioning ahead of schedule. So what is the broad indicative period that we can get to benefit from this advantage?

[Phuntsok Wangyal, executive]

Yes, I think before Raj gets into that, I will just give you a number on it. You would have seen my operational update, actually. 7,356 million units I have generated. And you would have seen we have clearly indicated that there is 1,159 million units were infirm. That is the value which we are talking about. 15% of the units which are generated in last quarter pertains to project which has generated ahead of schedule, and Raj talked about what is the merchant price realization which we are getting. Yes, sir.

[Raj Jain, executive]

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 pre COD power. Again, it is enabled just because we are working in an environment where we have secured connectivity for 30 gigawatts. So in a 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 delta available within our portfolio, which will enhance the returns for the projects which we are saying.

[Operator]

[Operator Instructions] Next question is from the line of Nikhil Nigania from AB Bernstein.

[Nikhil Nigania, analyst]

My question is just a reclarification, firstly, on the short-term market sales. So am I correct to understand 15% of volumes sold in the last quarter were on the short-term market or was it a high number? And what was the contribution of that in the revenues as well?

[Phuntsok Wangyal, executive]

Yes. So if you see out of 7,356 million units, actually, 1,159 pertains to those PPA projects where we commissioned ahead of schedule. Then there is like a additional 434 million units actually, which were contributing from 550 megawatts of merchant project which we have as a pipe of my portfolio. So if you see out of the units which are generated, nearly 21% is from market exposure on the projects. From a revenue perspective, the contribution should be nearer to 30% actually.

[Raj Jain, executive]

I just want to highlight one point here is, the good part is the pre COD power is -- provides you an option whereby you are able to sell that energy in the market and you -- and get these significant value figure for those PPAs. At the same time, in terms of risk, those will fall in under a normal COD project 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 contract PPAs out of that 7,000 megawatts for close to 16% I have a perineal merchant exposure in the sense that those close to 1,100 megawatt to 1,200 megawatt 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 contracts, which adds significant value to the company.

[Nikhil Nigania, analyst]

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?

[Raj Jain, executive]

No, no. We are ahead of schedule by a significant margin. So last year, 2,000 megawatt project, which we have implemented are ahead of schedule, that's by contracts between 1 year to 2 years. And at the same time, the transmission elements also provide some more flexibility within that time period.

[Nikhil Nigania, analyst]

Understood. Got it. My second question then is just I'm not sure if I read it correct in the notes. The convertible debenture from Total Energy is, I think, which was listed 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?

[Phuntsok Wangyal, executive]

No, actually, I think just you may be referring to Q3 event actually where we set up this new platform with Total. As a part of that platform, the staple instruments which we had in the past was complete -- was converted into a compulsory convertible debenture. So that, okay, the stable 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 staple instruments were nothing but an equity instrument. From an accounting purpose, to have that clarity, those staple instruments were converted into CCD but that was a Q3 last financial year event. Nothing has happened post that actually.

[Nikhil Nigania, analyst]

Okay, got it. But the coupon do we still give the coupon on that? I think the 12%, 13% coupon or not?

[Phuntsok Wangyal, executive]

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.

[Nikhil Nigania, analyst]

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?

[Phuntsok Wangyal, executive]

Absolutely. It is exactly in the form of CCD within the partner now there is absolute clarity, the risk reward should be shared equally between the partner or to the extent of their shareholding and your accounting treatment should also reflect that.

[Operator]

[Operator Instructions] Next question is from the line of Sumit Kishore from Axis Capital.

[Sumit Kishore, analyst]

A couple of questions. Of the 6 gigawatt...

[Operator]

Sumit, sorry to interrupt you. Can you speak with the handset, please?

[Sumit Kishore, analyst]

Yes. Is this better?

[Operator]

Yes.

[Sumit Kishore, analyst]

Yes. Of the 6 gigawatt capacity that will get added through FY '25. 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 2 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 on the road map going forward for carbon markets and what role Adani Green would have there? And how would that be adding to your cash flow stream?

[Amit Singh, executive]

Yes. Let me ask Raj to answer the first one, and I'll comment on the second one. So go ahead, Raj.

[Raj Jain, executive]

Yes. So out of the 6 which we are adding, close to 1,800-odd megawatt would be merchant, which is predominantly wind, so 1,000 megawatts out of that is wind, out of which 250 we have already done. Then on a mix basis, already, we have some 550-megawatt operational merchant. Again, that is predominantly wind, 350-megawatt out of that is wind and 200 solar. So from a split perspective, we are talking about close to 1,400-odd megawatt of wind and balance being merchant out of roughly 2,400 in total by end of this year as a merchant, this is out of a capacity of roughly 17 gigawatt.

[Amit Singh, executive]

So I think on the second thing you asked. Look, I think the carbon CBAM rules are now in practice in Europe. And if you look at some of the policy updates, which are coming from the government. They're also looking to update some kind of a carbon mechanism in India. And there's a lot of incentives being put together for industries who are hard-to-abate sectors or high power consumer or energy consumers to decarbonize themselves. And what that does is that drives a lot of growth for C&I discussions, C&I transactions. And not only classical industries like steel and cement, but also the -- you probably know the trend in AI and a 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 pump 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 in RERA, which were commissioned a few years ago. And also, we continue to look at the current and new carbon UNFCC regime, where we register these projects, and we also benefit from carbon credit sales as well. And the third dimension is the RACs, which are generated when we do a green or a DAM market sale. And these RACs 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 in response to the climate action.

[Sumit Kishore, analyst]

And what would be your current backlog of RACs that is unsold?

[Amit Singh, executive]

I think these numbers I won't be able to share openly. But we have put together, and we have some signed up with customers at attractive pricing over long term. And I think this -- the other thing you would know is that the BEEE has enforced RPO obligations and there are quite a strong penal action if you don't meet them by end of the financial year '25. So we're also expecting that some of the RACs and RACs unit price will continue to rise as we get closer to that date and beyond.

[Operator]

Next question is from the line of Dhruv Muchhal from HDFC Asset Management.

[Dhruv Muchhal, analyst]

Probably a question to Raj's response earlier. So you mentioned 1,800 megawatts would be merchant, of which 1,000 would be wind. So 800-megawatt merchant solar of the total 5,000 megawatt that you are planning to commission this year. But this 800 is purely a merchant. There would be also the pre-commissioning -- the pre-COD project that would be there, right? Or this is only -- I mean this captures everything? 800 captures the merchant plus the pre-commissioning ones?

[Raj Jain, executive]

No, no, no. So 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 the pre-commissioning power on.

[Phuntsok Wangyal, executive]

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 megawatts. And if you take 15% of that, that is 2,550. If you do a maths actually, this will make it absolutely clear. Right now, I had 550-megawatt of -- I ended with 550 megawatts of operational merchant project in last financial year. I commissioned 250-megawatt day before, yesterday, which is a part of 18,000 megawatts which Raj was talking about.

[Dhruv Muchhal, analyst]

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 re-exchanges were about INR 2.5 or INR 3 and probably assuming that in that commission is about 25%, 30% or even higher, at least the government is targeting capacity in the solar. Probably the merchant prices will fall even further during that time when the solar is generating. So how do you maximize benefit from this merchant sales of solar power?

[Amit Singh, executive]

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 costs, if you look at a peer-to-peer comparison of 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 plus difference of 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 good pipeline of C&I deals, which we are working on, which will not only require wind but will require a different combination of solar as well for daytime and our customers are looking at some kind of a firm power with very high CUF.

So we will combine some of these solar power and make sure that we deliver on those contracts. So like you also talked about, I think when you look at just in the price of time in the day time, the pricing is weak. But when you look at over a long period of time, when you're combining it with other things like the pump storage, we also are derisking 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 pump storage, which means that we will have 5.5 plus/minus gigawatt of pump storage capacity, and we will be able to convert the solar MUs into evening as well. So we have derisked our portfolio, making sure that we have a good mix between solar and wind and pump 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.

[Operator]

Next follow-up question is from the line of Ketan Jain from Avendus Spark.

[Ketan Jain, analyst]

My question is on the pump storage thing. You mentioned the CapEx for us is around INR 4 crores to INR 5 crores per megawatt. I just want to understand some of the peers have the CapEx around at INR 8 crores to INR 10 crores. What makes it lesser for us? Is it the site? Is it because of the site location? And if you can 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?

[Raj Jain, executive]

Yes. So I think 2, 3 points. What we understand the industry benchmark is anywhere between INR 5.5 crores to INR 6 crores per megawatt, cannot talk about where this INR 8 crores is, if there is someone who is doing at INR 8 crores 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% to 55% between the civil and 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 site and the other site is more enhancements or number -- what was the last question?

[Ketan Jain, analyst]

EPC, are we doing it on our own...?

[Raj Jain, executive]

Yes. So we have been -- we have divided the work in 2 multiple contracts whether it is equipment supply contract. So the -- for Chitravathi like the equipment is coming from 1 supplier, the civil part, again, has been divided into more than one contract, and that is being in that space. Obviously, we do our -- 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.

[Ketan Jain, analyst]

Understood. And the equipment is localized or is it imported, sir, for this?

[Raj Jain, executive]

I think I can come back to you on that. The supplier is not from India.

[Amit Singh, executive]

Yes. I think, yes, we won't be able to openly discuss it. I think we're still finalizing some of these things for our wind projects. But I think, yes.

[Ketan Jain, analyst]

Understood. Sir, my last question is on the recent import duty on solar glass, which the government has put. Is it going to impact us? Like are we -- were we importing the solar glass or are we going to again now procure it locally?

[Amit Singh, executive]

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 are expecting the price of module and cell to come down. And as you know that quite a few of our PPAs benefit from -- we can import from outside India. So we have that option available to us in several of the projects over the next year or 2. So we are not directly impacted by this change in -- 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. And we are very confident that over a period of time, this is the only way to reduce the cost and bring down our CapEx cost as well over a long period of time.

[Operator]

Next follow-up question is from the line of Ajay Sharma from Maybank.

[Ajay Sharma, analyst]

Can I check what sort of tariff are you expecting for the pump storage projects?

[Amit Singh, executive]

I think pump storage projects, as I explained earlier, I think we're not looking at purely just putting the pump storage on a long-term contract only. We will have a combination of approaches. We will -- for example, a baseline, if you look at is around INR 3.8 to 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 -- for the customers.

Now I think if you look at our mix of INR 5.5, we will make sure that 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 upside opportunity in this decade. I think we've kind of run out of time as well. So absolutely a great discussion today, and if we maybe pass it back to Viral.

[Viral Raval, executive]

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 reaching this call. Thanks a lot. Bye.

[Operator]

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.