Adani Green Energy Ltd
NSE:ADANIGREEN
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Adani Green Energy Ltd
Earnings Call Analysis
Q2-2024 Analysis
Adani Green Energy Ltd
Adani Green Energy (AGEL) has reinforced its dedication to being at the forefront of the global energy transition. With India accelerating its renewable energy tendering process towards a goal of 500 gigawatts by 2030, AGEL aligns its mission with this national objective, aiming to exceed 45 gigawatts of capacity by the same year. Currently holding the position with the largest renewable portfolio at 8.4 gigawatts, AGEL focuses on five strategic pillars: affordable renewable energy with storage for better grid integration, expertise in project execution, development of human capital and local supply chains, acceleration of digitalization and automation for cost-effective operations, and optimizing finance costs through diversified global finance pools.
AGEL has reported a remarkable operational performance reflected in a 78% year-on-year increase in energy sales, totaling 11,760 million units. The Capacity Utilization Factor (CUF) witnessed improvements across all segments, with solar CUF up by 90 basis points to 25.2%, wind CUF by 360 basis points to 40.2%, and the solar-wind hybrid CUF by 880 basis points to 45.4%. These improvements can be attributed to the enhanced plant availability, better solar radiation, and the use of advanced technology in solar modules and wind turbines.
The financial outcomes for H1 FY '24 epitomize AGEL's strength with a 66% increase in revenue from power supply to INR 4,029 crore and a total income of INR 4,979 crore. EBITDA from power supply rose by 58% to INR 3,775 crore, boasting an impressive EBITDA margin increase from 91.7% to 92.2%. Profit After Tax (PAT) stood at INR 694 crore, while cash profit soared by 63% to INR 2,082 crore. A reduction in leverage was also noted as the net debt to run rate EBITDA lowered from 5.9x last year to 4.99x as of September '23. These figures highlight AGEL's successful financial management and its focus on maintaining health leverage ratios.
With a planned capacity addition of 2.8 to 3 gigawatts for the financial year, AGEL has already secured the necessary funding. This reflects the sustained confidence from stakeholders and affirms AGEL's reliable global credit ratings. Additionally, AGEL is deepening its partnership with Total to form a joint venture encompassing 1,050 megawatts, including operational and under-construction projects. The company's dedication to Environmental, Social, and Governance (ESG) initiatives is also evidenced by their decision to adopt robotic cleaning to reduce water use, reflecting positively in its upgraded MSCI ESG governance score to 7.4.
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Ladies and gentlemen, good day, and welcome to Adani Green Energy First Half FY '24 Earnings Conference Call hosted by Investec India Capital Services. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand over the conference to Mr. Anuj Upadhyay from Investec India Capital Services. Thank you and over to you, sir.
Thank you, Enso. On behalf of Investec Capital Services India Limited, I would like to welcome you all for the first half FY '24 post earnings conference call for Adani Green Energy. We have with us the management team of the Adani Green, who will share the key highlights of the results followed by Q&A. I would now like to hand over the call to Mr. Viral Raval, Head Investor Relations, Adani Green, to take it forward from here. Over to you, sir.
Thank you, Anuj. Good afternoon, friends. Thank you again for joining us today to discuss Adani Green Energy's H1 FY '24 results and update. I hope you would have had the time to go through the earnings presentation. Just to introduce the management team here along with me. So we have Mr. Amit Singh, the CEO of Adani Green; we have Mr. Phuntsok Wangyal, the CFO; Mr. Raj Kumar Jain, the Head of Business Development; and also along with us we have Mr. Anupam Misra, the Head of Corporate Finance at the Adani Group.So in terms of the flow of the call, I'll first hand over to Mr. Amit Singh for brief opening remarks, covering broadly the business strategy and operational performance. And then Phuntsok will give remarks on financial performance and an update on the capital management program.So without wasting any further time, over to you, Amit, for your brief remarks.
Thank you, Viral. Good afternoon, friends. Good to be here today. As you know, renewables remains a cornerstone of global energy transition. And earlier this year, India has really accelerated tendering with 50 gigawatts per year and driving in that direction towards a goal of 500 gigawatts by 2030. We believe a coordinated policy action in this direction along with the wider industry effort is much needed to deliver on that ambition. Here in AGEL, in line with India's decarbonization goal, we remain very committed to deliver in excess of 45 gigawatts by 2030. Adani Green continues to have the largest operating renewable portfolio with 8.4 gigawatts in capacity. We continue to ramp up our execution capabilities as we prepare for the next phase of growth.And AGEL is extensively working on the next milestone of developing the largest RE cluster in the [indiscernible] Gujarat, which we'll share further updates on our progress there.As we drive our next wave of growth, our focus will remain on these 5 key pillars. #1, development of a very affordable renewable energy along with storage solutions to enable better integration with the grid. #2, capitalizing on project execution expertise at an increasing scale backed by advanced resource planning and fully integrated project management and assurance.Three, development of human capital and expanding local content and supply chain, because we need to make our supply chains resilient and cost effective. Fourth, accelerating the digitalization and automation to both drive efficiency, but also improve our overall cost of doing work. And lastly, making sure that we optimize our finance cost while managing the duration risk of these projects with a very diversified global finance pool.Now, reflecting on our operational performance in H1 of FY '24, as you would have seen, the sale of energy has increased by 78% year-on-year to 11,760 million units as a result of strong capacity addition and improved CUF across solar, wind, and hybrid portfolios.The solar portfolio CUF has improved by 90 basis points year-on-year to 25.2% in H1 FY '24 with improved plant availability and improved solar radiation. This is largely contributed by a very high digital and analytics on the O&M side and also making sure that we are ahead of the curve in solving some of the problems.The wind portfolio CUF has improved by 360 basis points year-on-year to 40.2% in H1 with -- consistent with speed and significant improvement in grid availability compared to last year.The solar wind hybrid portfolio CUF has improved by 880 basis points year-on-year to 45.4% in H1 of FY '24, backed by technologically advanced solar modules, horizontal single axis trackers and wind turbine generators as well as consistent high plant and grid availability. So overall, a remarkable operational performance for which I would like to thank my whole team and organization to deliver this.Let me now hand over to Phuntsok to provide us updates on financial performance.
Thank you, Amit. Coming to the financial performance for H1 FY '24, I'm delighted to share that in line with the improvement of operational performance, we have continued to deliver strong and consistent performance across all metrics with very comfortable on the leverage level. Just to share a very quick performance update. Revenue from power supply has increased by 66% year-on-year to INR 4,029 crore, with corresponding total income standing at INR 4,979 crore. As far as EBITDA from power supply is concerned, it has also increased correspondingly by 58% to INR 3,775 crore with an industry-leading EBITDA margin of 92.2%. Just as a point of like reference, last half year's EBITDA margin was 91.7%. From 91.7%, it has increased to 92.7%.PAT for the corresponding half year is INR 694 crore; whereas cash profit has increased by 63% to INR 2,082 crore. Now on the top of it, if you look at it from a leverage level perspective, now run rate EBITDA stands at strong INR 7,645 crore with net debt to run rate EBITDA at 4.99x as on September '23 and this compares to 5.9x last year. And if you recollect, when we raised the Holdco bond, the covenant which was agreed was 7.5x. So from agreed covenant of 7.5x to 5.9x to 4.99x as on September end.As Amit noted briefly, when he talked about, we remain continuously focused on optimization of financing sources, financing costs with the overarching objective being that our duration risk, while interest rate risk as well as our currency risk would be fully mitigated. From that perspective, we had a very diversified finance pool. And we continue to work with domestic and international banks.Now, this is getting reflected from the fact that for capacity additions planned for this financial year of 2.8 gigawatts to 3 gigawatts. As we speak, actually, we have secured funding for entire financing, part of which for the drawdown is already made. And for part, actually, documentation is currently underway. This reflects the continued support and confidence which all of our stakeholder continues to bestow on Adani Green per se.From a credit metric perspective, all of our global rating continues to remain affirm. We have met all debt covenants as well as 96% of our credit facilities remain in A to AAA bucket.Just briefly touching about, as you all know, recently, our Board has approved expanding our relationship with Total, whereby we will be partnering with Total for a joint venture of 1,050 megawatts, which, for the first time, will also include under development pipeline. That is 300 megawatts of operational portfolio and 750 megawatts of under construction and near construction as such. This deal is on track and in due course, actually, we will be approaching -- once the entire due diligence has been completed, in line with regulatory requirements, we will be approaching the shareholders for approval.Now this deal not only reaffirms the relationship with Total, but also expands the ambit of the relationship from a pure-play operational portfolio to being a minority investor, a substantial minority investor at the [indiscernible] level to a portfolio where there will be an element of construction risk per se.From an ESG, which remains a very important cornerstone for our operation, while delivering excellent performance, we have also made commendable progress on our ESG commitment. On the -- Amit was talking about our capacity addition. And as we have spoken in the past, a larger part of the capacity addition will come in Khavda, where at this time we have deployed a workforce of more than 5,000 people and where we have tried to ensure that we extensively hire local talents and also upskill them because that's a remote part actually. And it is also imperative that upskilling also builds up your community engagement per se.As we go forward, we are electing to use robotic cleaning to significantly reduce our water usage to almost zero across all of our plants. Now this is getting reflected in terms of the various affirmation which we have received. And we are pleased to inform that recently MSCI latest ESG rating update has put AGEL offered governance score has been upgraded to 7.4. This is the highest scoring range respective to global peers.So overall, operationally, financially, H1 and Q2 has been a fair [indiscernible] satisfactory performance per se.With this, I would like to end my comments and request to open the line for Q&A from various participants. Thank you.
[Operator Instructions] The first question is from the line of Puneet from HSBC Bank.
Congrats on good numbers. My first question is with respect to the refinancing. I guess a large chunk is due in FY '25. And this was largely dollar-denominated debt. What are the plans for that? And what kind of cost of debt are you expecting for that refinance?
Sure, Puneet. I think, as you know, in FY '25, actually, we have 2 refinances which is coming into play. One is our $750 million Holdco bond and the second one $500 million RG1 bond actually. As far as Holdco bond maturing in September '24 is concerned, you would have noticed -- you would have noticed the public release, which is being done towards the end of quarter 1. At the group level actually where it has been, effectively, we'll state that as far as at the group level is concerned, a liquidity pool has been created of nearly $1.3 billion actually to take care of near term. That is 12 to 18 months term liability, which is coming, which is effectively if you want really look at it across Adani Group, that includes Holdco bond per se. Now, on the top of it, we can now, in fact thought process as far as Holdco bond is concerned, will be replaced as and when the maturity comes in. That is from a Holdco bond multi-perspective.Now, RG1 bonds, we are on track actually as we have communicated in the last earnings call, this will be refinanced through USD-PPP market. That is how -- the preferred approach actually. And right now, the discussion is currently at a, very honestly, advanced stage to conclude the RG1 refinancing.
And what kind of cost of borrowing should one be expecting for these?
Yes. So as far as the Holdco bond is concerned, as I said, it will be repaid actually. So we are not -- so then the cost of borrowing, et cetera, it doesn't come into play actually. Now, from RG1 perspective, I think we need to look at it from 3 elements. Because -- and it's pretty clear that, okay, the rates per se has gone up actually in between as far as benchmarks are concerned. But what is also imperative to note is during the same period actually [indiscernible] rates were moderated very extensively. Second thing which we have also, like to observe, which I guess will, Puneet, you will also be aware or which you will also be fairly familiar with this.Spread levels are actually spread -- spread levels for a long tenor contracted projects actually, which is what our RG1 portfolio is. The credit spreads are coming down. So if we really look at it, we don't expect any material increase in effective cost of refi as far as these instruments are concerned compared to the cost of the borrowing which we have at our AGEL Holdco level, which is near to 9.6%.
So 9.6% all-in is what you're expecting, including the hedging costs et cetera.
Yes.
And just to add to that, I think if you look at RG1's current debt cost, it will be definitely cheaper than the all-in cost at which the RG1 current debt is there. So there will be a cost saving overall.
Yes, and Puneet, actually, I think we have briefly touched this during our last call. As you would have noticed that even at our portfolio level, actually, there are projects which are being funded through long-term amortizing instrument. But as a part of our cost optimization strategy, actually, we have been doing regular refi. So there are non-sovereign projects which we have refi'd actually, where interest rates have been sub-10%. Now, those are completely non-sovereign, whereas RG1, a substantial part of the portfolio is sovereign. So that will also get reflected in the cost of refi for RG1 instrument.
And second, in your new portfolio, what is the mix of C&I in the entire portfolio as well as the operational assets?
I'll invite Raj to comment on it.
Sure. So I think as has been mentioned here, so out of the 20.4 gig, we have close to 3% as the non-contracted portfolio. When I say non-contracted, it is basically merchant, not on the C&I. We have active discussions on the C&I bit as well, and that will get reflected as we conclude in the near term. So that's broadly the mix. So essentially, today -- even today, 97% of my portfolio is contracted, but in fact as I said, with the great quality, which you can see that is more than 90% sovereign rated equivalent counterparties.
And on the manufacturing linked tenders, is there any progress, any time line which has been given now? And there were still some unsigned tenders. Have they got signed?
So we are now getting into the execution phase of these manufacturing linked contracts. And as we progress by end of the year, you would find some of these capacities commissioned after the guidance which we have given of 2.8 gigawatts. The last chunk of that is relating to these projects. Second, even in the next year, we will be commissioning a large chunk of these projects. With respect to the unsigned capacities, we are in very, very advanced discussions and expect that within this quarter, current quarter, the balanced capacity should be kind of as well.
And lastly, if you don't mind, can you give us some guidance on the commissioning plan for FY '25 and '26 and balance for '24 also?
Yes. I think today, we are projecting 2.8, 3 gigawatts as part of our financial year. And our bandwidth, we need to scale up our bandwidth and our capacity to grow that north of 5 gigawatts. Now based on the business plan and the timelines and mix of projects and customers, we are targeting in that neighborhood. More color we will provide later part of this year. But one thing is clear that we need to ramp up our capacity of execution, which we are at the moment quite significantly. And also, we need to make sure that the supply chain also kind of grows with us. So we are kind of working on that right now.
[Operator Instructions] The next question is from the line of Nikhil from Alliance Bernstein.
My first question is on the investment from Total Energy. It looks like a very good sum given the quantum of capacity it's tied up to. I wanted to understand, is the investment all equity? Or is it a mixture of equity and debt or equity and debentures like it was last time?
I can take that question. This is a full equity investment in the nature of equity 100%. So what we have done is the value of the portfolio of 1,050 megawatts. Out of this 1,050 megawatts, 300 megawatts is operational. So the entire cash flows of this portfolio have been taken. For the under construction and under development projects, the CapEx cost that will be incurred is taken as a negative in the free cash flow to equity in determining the value. So it's a pre-money value for those 2 assets. And for that asset portfolio, the value has been determined at $300 million. This is a pure equity transaction. The way this has been captured is, if you look at the entire Adani portfolio, Adani Green portfolio, it is basically -– Adani Green has been taken as a 30, 40 gigawatt company. And from that standpoint, the mix of -- similar mix of operating under construction, under development and you basically proportionate it to 1,000 megawatts, you get to this number. So that's the way they have -- the transaction has been worked out.
The second question I had was regarding the quarterly results. So I wanted to understand what part of the revenue is a onetime income. I could see one item related to a land purchase of, I think, about INR 120 crores. So if you could just throw some color on that, what portion of that is one time, the revenues?
Yes. So if you see on the revenue from power supply actually, revenue from power supply one time, there is nothing onetime actually. But what impact the H1 has is, if you recollect our Tamil Nadu projects actually, Kamuthi, where towards the end of the last financial year, we managed to get our tariff increase across the board. So to that extent, actually, that is getting impacted. Otherwise, the revenue from power supplies, there is no onetime impact [indiscernible].
And what about other income, because that number had a big jump this quarter as well?
Yes. So other income, actually, other income, if you see, other income has got LPS element. Now LPS is something like which is onetime actually. This includes 2 types of LPS actually. One is which we have received for our Tamil Nadu project. There was a regulatory dispute in terms of whether CUF is getting capped at 19% or above. So that above 19% LPS income is there, around INR 54 crore actually. So that we have already realized it. Okay.Then there is another element which is LPS for our past due actually. Now that is approximately INR 180 crore, out of which approximately INR 60 crore we have already received payment. So that is basically the onetime income.Otherwise, other income includes a large amount of interest income and all, which are very steady in nature and which are likely to go up.
Just further adding, even the LPS, if you look at that, if the LPS is not there, it means I will have lesser interest outgo because the money is coming in time. So from that perspective, while the current LPS, which you see is still accumulation for past periods, but per se that either the LPS would be there or the interest outgo will be lesser. So it will nullify each other in a steady state basis.
One last question, if I may ask, is then on the plan for the year. I think if I heard correctly, it's almost 2.8 gigawatts of additional capacity this year. But given that we have done hardly 200 megawatts in the first half after a very strong last year in terms of addition. And even if you look at the capital work in progress, it's nowhere close to the number we had at September '22, for example. So A, what was the reason for the slowdown in the last 6 months? And B, how do we get confidence on being able to execute so much in the 6 months for the full year guidance?
I think there is a bit of a cycle of these projects. And like I said earlier, we are undertaking this -- majority of this work in Gujarat, in Khavda, where we had to spend a lot of time and effort in putting the baseline infrastructure and operating environment for our people to work, which we successfully completed earlier part of this year. And now the work is in full flow. As I announced earlier in the remarks, we have 5,000-plus people working there. And we are seeing very rapid progress. So stay tuned. I think we will share with you an update on our commissioning as we go. But we're very confident of our team's ability to deliver on those plans.
And Nikhil, actually, if you recollect, the guidance which we have given for capacity to be added at this year, we have always have indicated that this will be towards the second half of this financial year. And in terms of your capital work in progress, where the solar construction starts is when you start with all the structural elements, tracker, et cetera, and all, then the module, which is the largest cost element, come towards the last part of your implementation philosophy. So modules have now started coming in, post September actually. And that is precisely the reason we would have -- you would see that with, okay, the capital work in progress. You may get a sense that capital work in progress is slightly lesser than commensurate with the capacity augmentation, which we are talking about. Hopefully, it clarifies this.
[Operator Instructions] The next question is from the line of Apoorva Bahadur from Goldman Sachs.
Sir, can you please share the quantum of infirm power sold during the quarter? And what was the same number in the same quarter last year?
Yes. I think infirm power for this half year is nearly INR 177 crore actually. Infirm power, we were not anyway expecting much revenue as far as this half year is concerned. Last year was going towards nearly -- I think for this half year would have been approximately between INR 800 crore to INR 900 crore, exact number is not readily available to me.
And sir, any update on your plans for pump storage?
Yes. On the pump storage, we have quite a few projects in the queue. As you probably are aware, this requires a very concerted effort to do a proper DRP study, social study, forest approvals, and so on. So we are undertaking a lot of that work for several of our projects in the higher teens. At the same time, we are nearing completion of one of the projects where we will be taking FID. And once we have an FC, we will share with you an update. I feel very confident that we will have that update for you before end of this financial year for sure. But that is absolutely the way to bring RTC power to the country and that will be the most economical way to do that. And we firmly believe that is a way to go for AGEL and country. And that is one of the areas which we are developing quite rapidly as well.
Sir, from FID, how long do you think does the project take?
It should take anywhere between 27 to 30 months after that. That's the general cycle. And the project has that nature that it can be turned around in that period. So I think we will come back with more details as we come out with a more detailed disclosures on it. So I think we are there in terms of doing the FID very soon on that.
The next question is from the line of Puneet from HSBC.
Just an observation and would request your thoughts there. Like you talked about, bulk of commissioning happening in second half, a lot of other players are also aiming for the same. And where are you buying these modules from, to start with?
Yes, sure. So I think we have optimized the procurement based on the way the contracts are setup. So there are procurements happening from Southeast Asian countries as well as from China, depending upon the contract. And as Amit has mentioned, some of those modules have already started trickling in, in the site. So that's how it is currently at.Specific actually, I think for this financial year, I think we have indicated in last quarter itself that the bulk of it will be from China only.
So in that context, I want to understand how would the risk play out if you were to import these modules. But the commissioning gets slipped by, say, 5 odd 1 -- 5 odd days and move to April. Would you still be allowed to commission? Or what are the risks that we run into in case COD is delayed by a few days?
So let me answer that. So our current plans, which we are doing, are way prior to their contracted [ SCUD ] dates. So we do not have any risk even if my plant gets delayed by a couple of months with respect to any of these natures. So these are not that I'm trying to do a project, which has an SCUD of March 31, '24, and then trying to achieve and running that race. No, these are much ahead of their current SCUDs.
So because I was – obviously that ALMM modules, which are not qualified under ALMM, can't be allowed to be imported before 31st March?
Project, which -- for which I'm setting up the capacity has the requirement to comply with ALMM.
Yes. But Chinese models would not be ALMM, right?
No, I think just to clarify the regulation on the ALMM. And I think it would be good that we can also offline connect. But there are projects which are supposed to comply with the ALMM requirement. There are projects which are okay without the ALMM requirement. What I am commissioning right now does not have that issue as far as the capacity because these projects, as you know, some of these projects were auctioned much prior to the ALMM notifications. But happy to connect separately on this and take you through the entire regulatory construct on that.
The next question is from the line of Rabindra Nath Nayak from Sunidhi Securities.
Sir, can you just throw some light on the horizon by which where the operational capacity would rise to 20 gigawatts from the current around 8 gigawatts?
So I think we have already mentioned and guided about our current plan for this year. So exit should be around 11-ish by end of this financial year. And then, as Amit mentioned, we are ramping up our capability towards 5 plus every year. So I think the number is then known to you where it probably would take 2 years or less after this financial year to reach this.
And I think if, Rabindra, you are asking for the context of when these PPAs needs to be executed under the -- under the contractual arrangement, then that is going to be okay. You can say, one of the -- depending -- that will depend upon PPA to PPA. But we will have like a time, at least 3 to 4 years to complete this to balance our 20 gigawatts actually, 20 minus 8 now.
The next question is from the line of Nirav Shah from GC Investments.
Most questions have been answered, but just one question. On the pump storage and other battery projects, do they form part of the 45 gigawatts of target portfolio or they are over and above that?
Yes. So that's where the mix comes into the picture. It will be a mix of solar, wind, pump, hydro, and batteries. There is no double counting. So I'm not saying, if I'm putting solar, which is feeding into the pump storage plant. And that's the way I have contracted my revenue. There is no double counting in that. So it will be a fair mix of it and pump storage in that manner is included within the 45 gigawatts portfolio, which you are talking about.
[Operator Instructions] The next question is from the line of Dhruv Muchhal from HDFC AMC.
Sir, firstly, on your wind portfolio, the PLFs have improved meaningfully. The capacities have not changed much from 900 to about 1,200. So is this seasonal? Is there some efficiency improvement or maintenance changes? What's driving this?
Yes. I think maybe let me start and maybe give more comments. I mean, I think we had one-off incident also last year, which we did not have this year. So that is partially responsible. But beyond that, I think managing event portfolio requires a very proactive approach in terms of looking at the maintenance and how we maintain, how we have spares and inventory. And with our learnings and experience and digital enablement, we have been able to really improve and step up our performance in our portfolio. I would even say that that journey is not complete. I think we still have more room to improve there. And we will definitely see some positive upside there.
And Dhruv, actually, if you recollect the underperformance of wind in Q1, when we discussed actually post Q1 call, we gave our view that -- in our view, actually, over the financial year, we did expect wind speed to pick up actually. And our Q2 is going to be, obviously, which you would have seen is a combination of the operational improvement, which Amit was talking about, better wind speed as well as one of the okay, moderation of impact of one-off even which happened last year.
Just to add in terms of checking out the math, so basically, in addition to what, I mean, Amit and Phuntsok said on the operational efficiency, I mean, there is across the board improvement in the efficiency. But also in terms of the math, basically, when you look at the capacity increase, this is basically [indiscernible] capacity as of H1 and this year, correct? So when you look at the weighted average capacity, that capacity increase is also substantial, when you look at weighted average capacity, constraint the time waiting.
The second was on the hybrid portfolio. So it's about 9 months to a year now that your hybrid portfolio has been operating. So just wanted to understand what kind of PLFs are you achieving on an annualized basis? Is it broadly in line with what you were targeting and/or they are much better than what you think was? So just some thoughts there.
Yes, sure. So I think -- while we -- for the H1, we have reported the numbers at 45.4% across the 4 projects of hybrid, which we have 2,140 megawatts. The achievement has been very much in line with what we had expected. And this is something which the country should follow more and more when there are more integration of the capacities are happening. On co-located hybrids are something which will really help solving a lot of issues. So we are very comfortable with the way we have performed. Our modules are performing the way we wanted them to perform. Our operating performance there has been good. Wind turbines, again, those are doing really well in terms of their operating performance. So clearly there where we wanted them, which is top of the line performance from these turbines and decline.
So for the 2,140, is it fair to assume about 40%, 42% PLF on an annualized basis?
Yes, you should be able to get that because H2, you're right, the wind will come down a bit. So we should be able to get around that number and probably slightly higher. And so that's -- yes, so that should be there.
And one clarification, now, you said -- your says the operating capacity is 8,316. But in brackets, you mentioned 9,021. It seems to do with your hybrid portfolio. So I just wanted to get some clarity. What causes this difference?
So I think I'll explain that. So basically, this is just to clarify. So there is one hybrid capacity of 2.1 gigawatts, okay? So approximately there is 700 more megawatts, if you look at that capacity from the perspective of standalone solar AC capacity plus standalone wind AC capacity, correct? If you add that 700-odd megawatts, then it is basically the effective AC capacity is 9,021 megawatts. It is just to clarify that this is where it stands. This is where it stands in total actually.
Okay. But on an inverter basis, the capacity will be 8,316; that's the right way to understand?
So -- no. So let's clarify this a bit further. What -- when we say 8,316, it's a typical contracted capacity. When someone says that let me bid into a [indiscernible] PPA or let us -- let me tie up certain capacity, then this is the capacity we are talking about. However, as you know, multiple developments are reporting the capacities in a different manner. So that's where we are clarifying that this capacity is per se, an installed capacity base of 9,000-plus megawatt. It is still an AC capacity. 9,000 megawatts is still an AC capacity. But since there is a blending of both wind and solar in case of hybrid, the contracted capacity becomes 8,316.
And just last 2 things, just to reconfirm, you mentioned target for this year is about 2.8 gigawatts. And also if you can mention the CapEx amount that you're planning for this year?
Yes. CapEx actually remains what we have guided in the past. Okay. There may be a slight moderation to reflect the recent softening of module prices actually. But what we have guided is nearly INR 14,000 crore to achieve 2.8 to 3 gigawatts. That still remains same.
The next question is from the line of Anuj Upadhyay from Investec.
Sir, I just want to understand, factoring the trend that the model prices are now falling. So what incremental or the escalation we can assume only IRR for the project which we have already been pitted, but yet to be tendered out?Secondly, I also want to get a sense of your assumption of where the model prices would remain going ahead, say, in the near term, another 6, 7 months kind of a time period? Whether it's expected to remain at a similar level or it could oscillate from here on?
Sure. So I think, taking the second question first, on the module prices. Yes, there has been recent significant fall. I think as high as depending upon the timeline, you take, if you take a year's timeline, probably around 40% fall in the prices. However, we do take a lot of supplier feedback, a lot of market intelligence. When we plan for our projects, whether when we bid for those projects or when we plan for the projects coming this year or next year. So our CapEx do reflect the longer-term or, I would say, medium-term views around the -- some of these commodities. And, however, as you have seen in the past, the prices do go in one or other direction by a significantly higher velocity than what you would see in a normal economic environment. Now, yes, in the last -- as I said, in the last few months, the prices have come down, probably around $0.15 right now. This will give us some benefit as what Phuntsok has mentioned on the un-contracted capacity. Generally, $0.01 of module raises the returns by 1.2% on the equity IRR. That has -- that is the broad measurement. But again, it is dependent on the tariffs at which you are talking about.In terms of our expectation on the module prices for next year, we do believe that there has been a very sharp decline recently. But at the same time, given the [indiscernible] capacity which is being seen in the China as well as the moderation of the economy, this should be in similar range. It is difficult to, again say, predict a $0.01 or $0.02 move this side, that side. But probably it is safer to assume that if we are talking about next 12 months, this is where it should be.But again, it's a pretty dynamic market. We have seen one polysilicon plant burning in China leads the prices much higher. So I think we need to be very vigilant about how things move and plan it in a manner where you have your base returns protected when you make your assumptions for a particular project. I hope I answered the question.
One, just to reconfirm, you mentioned a change in $0.01, bring about 1% or 2% kind of a variation in the IRR.
We're expecting 1% to 1.2%.
1% to 1.2% or $0.01?
It depends on the tariff at which we are putting up the percent.
Secondly, sir, you mentioned that current year, we are targeting to execute 2 to 3 gigawatts capacity. We have around 10 plus gigawatts which are under construction phase. Can you just give a broad timeline when exactly we plan to execute all of these? I'm summing this question, just in order to understand or get a sense of when -- on which phase, probably Adani Green would come back to market aggressively so as to scale up that capacity or moving the target 45 gigawatts capacity by [indiscernible]?
Yes, I think maybe I'll let Raj talk about when we will do the 20 megawatts and then I'll maybe comment on the question you asked also.
Yes, sure. So I think just to be -- again, talking about the numbers, we have about 8.3 megawatts odd today. We're adding close to 2.8 megawatts this year. We'll be around 11 megawatts by end of this year. We are geared up, right now working on that, pretty confident that we'll be doing 5-plus year-on-year going forward. And once we achieve that 5, I'm sure there will be KRAs for us to increase that further from 5 to higher. And that's what the DNA is. So coming back, yes, after the end of this year, not more than 2 years for the balance capacity until 20 megawatts. But internally, we do not necessarily focus on 20 as a number. We are very much clear that our targets are 45 gigawatts by 2030, in a manner where we are enhancing our returns beyond the current profile and we will ensure that the portfolio mix is such. So I'll just invite Amit to comment on the second part.
Yes. Thank you, Raj. I think it is very important for us to recognize that we have to get our capacity to execute these projects fast so that we protect ourselves from execution risk, cost variations. And at the same time, we need to maximize our margins and pricing as well. And a lot of better pricings are available when you have a solution-based approach. And as you heard us talk about projects like pump storage, projects like C&I projects, projects where we have merchant risk. And we have a portfolio and the size of portfolio where we can do that, always bring us better returns. So our approach is, in the short term, is to make sure that we take advantage of that. And we grow the portfolio in that direction. So, you will hear us in the next, I would say, 6 months, announce a few projects where we are stepping up and going after that projects. We don't believe that signing [ vanilla ] PPAs will bring us the best returns. So we will be carefully monitoring the market. And we'll participate where we essentially make sure that we high-grade our portfolio and get the best returns for our shareholders.
As there are no more further questions, I would like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you. I believe we had a great quarter, a great hedged one. So thank you to the team and all the management team, which has been part of delivering this. And before we close the call, let me reiterate that at AGEL, we understand the importance of our role in mitigating climate change risks. We firmly believe that apart from delivering returns to our shareholders, it is a model imperative for us to build a cleaner planet for our future generations. We'll do that by focusing on 5 key pillars: By delivering an affordable renewable energy along with total solutions to our customers, capitalizing on project execution, experience we have built over the years, development of human capital and expanding local content and supply chain, accelerating digitalization while optimization of our financial costs as well. Thank you. Thank you for joining us today. And we look forward to meeting you as and when we go. Thank you.
Thank you, Anuj, Investec team and Chorus team for organizing this call. Thanks a lot. Bye-bye.
Thank you so much. On behalf of Investec Capital Services, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.