Adani Green Energy Ltd
NSE:ADANIGREEN
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Adani Green Energy Ltd
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Ladies and gentlemen, good day, and welcome to the FY '22 Earnings Conference Call of Adani Green hosted by Investec Capital Services. [Operator Instructions] Please note that this conference is being recorded.
We have with us the management of Adani Green. I now hand the conference over to Mr. Apoorva Bahadur from Investec. Thank you, and over to you, sir.
Thank you, Rosia. Good evening, everyone, and thank you for joining us today. From the management, we have with us Mr. Sagar Adani, Executive Director, Adani Green; Mr. Kaushal Shah, CFO; Mr. Raj Kumar Jain, Head, Business Development; and Mr. Viral Raval, Lead IR. Without taking any more time, let me hand over the conference to Mr. Adani and team for their remarks, post which we'll open the floor for Q&A. Over to you, Sagar Bhai.
So thank you, Apoorva, for that brief introduction. Thank you, friends, for joining this call. So I'm Kaushal here, the CFO of Adani Green. Warm welcome to all the participants for this earning call to discuss the operational and the financial performance for the year ended 31st March '22.
We have uploaded the earnings presentation on our website, and we hope that you would have a sufficient time to go through the same. Let me walk through some of the recent updates followed by an overview of our operational and financial performance.
So on a year-on-year basis, the operational capacity has increased by 56% to 5,410 megawatt with the persistent efforts of our team. Over and above, there are additional 1,600 megawatts, which is being operational. So -- but because of some technical reasons, we are not able to declare official COD. So overall capacity, as we speak, is 7,200, and we are able to sell the power on a short-term basis on this.
Further, the total portfolio now stands at 20,434 megawatts with the latest PPA signing for 450-megawatt solar project with Punjab State Discom. So that is on the capacity side.
On the strategic investment from the IHC, I'm pleased to say that Abu Dhabi-based international holding company is in the process of investing USD 500 million as primary capital in AGEL. This will be a long-term investment in India as the country is driving much innovation globally, especially in the green energy sector, and AGEL expects to play a significant role in unlocking India's complete green energy potential and thus value -- thus adding the value.
This investment will help AGEL deleverage its balance sheet, boost its credit rating profile and thereby helping reduce the cost of capital and further support future growth. I'm pleased to say that yesterday, we had an EGM, and this resolution is passed. So we are expecting this money to flow before 15th of May.
Another important milestone, as you are aware that the last year, we have done the Asia's first construction facility of $1.35 billion. And there is a further addition that AGEL has raised USD 288 million construction facility and thereby increasing the total construction rollover pool to USD 1.64 billion. The extended pool of liquidity strengthened the AGEL strategy to fast track the development of its under construction asset portfolio. The facility is a green loan certified by ISS ESG and will have a significant contribution towards UN SDG 7, which is affordable and clean energy; and SDG 13, which is the climate action. So this is in line with what we have told to our investors [ trend ] and that we have a fully funded growth plan for entire 40 gigawatts which we are planning. This is one of the addition to that.
Now I shall brief you about our progress and important milestone towards our ESG commitment. In line with our commitment and well ahead of our initial goal, 100% of AGEL's operating capacity is now single-use plastic free. So this is a major milestone which we have achieved. AGEL has also featured in CDP India disclosure report 2021 as the only company in India in renewable sector disclosing greenhouse gas emissions in all the 3 scopes. And reaffirming the ESG commitment, AGEL has won the Golden Peacock Award for sustainability for the year 2021 in the Renewable Energy category.
Over and above, as I have briefed in the last, we have done a benchmark in the governance. Also, the Board -- the Audit Committee is fully comprising of an independent directors. So Board structure is completely changed and majority of the committee, we have an independent directors heading and participating into that committee.
Now let me brief you about the operational and financial performance. The robust capacity addition and the best-in-class O&M practices have led to a continued impressive operational and financial performance for the year ended 31st March 2022. If you look at the CUF, which has improved by -- solar CUF improved by 130 basis points year-on-year, and the wind CUF has improved by hopping 400 basis points to 30.8%. Over and above, we have been able to achieve 100% plant availability and the improved grid availability of 99%. All of these we have achieved in the midst of COVID pandemic, which was a hurdle for many of the peers.
Wind CUF improvement is backed by technology advance and more efficient newly added wind turbine generators, improved plant availability of 97% and improved grid availability of 100% and improved wind speed.
The sale of energy has increased by 72% to 9,426 million units, backed by robust addition of 1,940 megawatt renewable capacity over the last 1 year, along with improved solar and wind CUF.
Supported by the strong performance, AGEL's revenue from power supply has [indiscernible] to INR 3,783 crores and EBITDA also from the power supply has increased by 60% year-on-year to INR 3,530 crores, and EBITDA margin has improved by 100 basis points to 92%, which is normally 200 bps higher than our immediate peers or competitors.
The cash profit has increased by 48% to INR 1,854 crores. So a substantial cash surplus which is available, which we can use it for our growth purposes. If you look at the PAT, which has increased by 169% from INR 182 crores to INR 489 crores.
So in conclusion, the last fiscal year has been very eventful for us. We successfully completed acquisition of high-quality SB Energy portfolio, which has been truly value accretive as evidenced in the overall improvement in the operational performance and further strengthening of our counterparty profile. At the same time, we have fulfilled our commitment to fast-track greenfield renewable capacity development. Further, we are aiming to integrate newer technologies that will improve the efficiency of power generations while also lowering the cost of electricity.
In FY '22, we have also made considerable progress on the ESG front and our commitment to light up a sustainable future is only growing stronger as AGEL continues to get global recognition of its ESG efforts through the rating from the multiple prominent ESG rating agencies and significant ESG-focused investment.
So with this, I would like to stop here and the floor is open for the questions if you have. Thank you.
[Operator Instructions] The first question is from the line of Rahul Modi from ICICI Securities.
Congratulations, Sagar and Kaushal Bhai, for a great set of numbers. So just a couple of questions on the portfolio -- some of the scenario going ahead. So we -- as you mentioned that out of the 5.5 gigawatts we've commissioned, we've got another almost 2 gigawatts, which is almost there. So for the balance [indiscernible] gigawatt, sir, when do we expect the capacities to get commissioned over the -- whether it's 2, 3 or 4 years? And how much CapEx is [indiscernible] for the [indiscernible]?
So basically, what you should do when you calculate, every year, you should consider average 3 gigawatt of capacity addition as a ballpark figure. This is I'm talking about only greenfield. If we do anything above inorganic growth, that will be an extra. So that is one thing, 3 to 3.5 gigawatt is a ballpark figure which we are going to add every year.
And the CapEx figure every year, we are targeting about INR 20,000 crores every year for this -- over the period of next 4 years. So you can consider that around INR 80,000 crores will be likely CapEx over the period of next 4 years.
That's very helpful. One thing, if you can throw some light on [ off-late ] post COVID and during COVID times. We've seen that China -- Chinese solar module companies have actually reneged on contracts that is on the price contract, and that caused a lot of delays. You've almost seen 20%, 25% plus kind of the cost circulation from their side. So are you taking any dealers from that front? How are we tackling that situation?
Yes, there have been -- Sagar here. There have been instances across the board of reneging contracts and not following through with the prices and terms and conditions that they had signed to, not for us, but for everyone. So of course, we have also faced that issue. From a delivery point of view, although we have been able to manage deliveries for all the projects in time because -- and hence, we've been able to commission what we have commissioned over the last 12 months.
So deliveries have not been an issue for us, but price certainly has been. And we've seen projects go up in overall total project cost from about 5% to 7%. But we have also been able to sell a lot of the power on the short-term exchange. And as you are very well aware, prices right now are very, very accretive. So we've been able to sell a lot of that power at INR 12 to INR 10 per unit, INR 12 per unit, INR 7 per unit. And we've been able to offset a lot of those cost increases by enhanced revenue before commissioning of the project.
Okay. Okay. That's great. And sir, last question from my side. Of the INR 38,000-odd crore debt for FY '22, so how much would be the floating rate debt you can probably get back to the [indiscernible] movement in the interest rate?
So a majority of our debt is a fixed coupon. So we are not expecting any major movement to our date, which is currently at around -- on an average is around 8.8%. So we don't see any major movement in that particular -- in fact, we have a plan to reduce some of the debt by having the domestic bond issuance and other things. So current, some of the loans which are at little higher rates will also bring down the overall cost.
The next question is from the line of Mohit K from DAM Capital.
Congratulations on the capital raise and a very good year. My first question is the -- you said that 1, 2 gigawatt is waiting for capacity addition. What is this technical thing which is stopping us from declaring commerciality? And is it going to be -- is there some penalty under the PPAs, which can be imposed to us? I do understand that we're selling at a high price that can [indiscernible].
So there is no penalties under the PPA, Mohit. Thank you for the question. There's no penalties because still we are well within the PPA time lines for all the projects. And we are not overshooting the legal PPA rate by any means because our projects were commissioned significantly earlier than when legally we are expected to complete them.
There are a few technical low-voltage related issues here or there, which is why we are not able to give full legal COD. But we're able to -- still be able to sell a significant portion of that capacity on the exchange today. So that's the -- it's more -- it's a technological issue wherein there is some technical issues in transmission lines here. They are in some small chunks of that overall capacity. But at the same time, we also need 100% completion for being able to declare it as the full plant being commercially COD-ed. So once those small issues are rectified, we should be able to -- which is only 2% to 3% of the total capacity. We'll be able to declare full COD on the plant completely.
Is there a compensation paid by this calls in case this is delayed for, let's say, theoretically?
No. So as long as we supply to them within the PPA time line, which is something that we are confident we'll be able to do, there is no penalties of any sort.
Understood. Secondly, sir, the -- we have raised -- we are raising INR 38 billion, right? That is a decently large chunk. And we also have a holdco bond of INR 55 billion. And there is a large amount which is supposed to repaid in FY '25. Is this INR 35 billion, which you look to -- which you're raising right now, is it -- is there a plan to reduce this holdco debt? Or do you think the FY '25, you will say -- you'll take care of it later and this will use for equity requirement for our portfolio?
This will primarily go in for growth and the INR 38 billion, and that is what will accelerate the development plans of AGEL. If you see the holdco debt the way it is sized is via an NPV of future equity cash flows. So as soon as we accelerate the portfolio and we grow faster and better, the capacity for drawing on holdco debt significant increases as well.
So we feel very -- in fact, in FY '25, we will be able to -- we don't -- there'll be a significant amount of cash flow coming from [indiscernible] as well. So we will pay back part of holdco debt and part of it will continue for after. But of course, it depends on the situation at that point in time in terms of the opportunities in front of us, in terms of various different things.
But we would also be -- we have our senior debt of [ G1 ], which is due for refinancing in FY '25. So we'll be refinancing that as a senior debt, but the holdco bond, part of it, we'll pay back; part of it, we'll continue depending on whether we have any acquisitions that we can do or if there is space for drawing that capacity for further growth. So we'll take a decision at that point in time.
So given everything, is this INR 38 billion sufficient, do you think, for developing your entire portfolio of 20 gigawatt? Or do you think you need to raise equity at some point of time?
No, the INR 38 billion will be fully funded because as you very well would be aware, INR 38 billion is in addition to the capacity that we have for raising holdco debt and the significant free cash flow to equity coming from our plants every single year, which number rises astronomically year-on-year. So we have quite -- we don't expect or foresee any equity raises after this.
Understood. Lastly, sir, what was the money paid to acquire the SoftBank acquisition asset? Can you just let us know the amount which you paid? I think INR 79 billion of debt has come from SoftBank acquisition. Can you [indiscernible] the equity portion, the equity amount which you've paid to the company? And is -- are there any legal issues or the issues with the PPA, which we can foresee, which can -- there could be some issue in terms of installing the entire capacity of 5 gigawatt?
So Mohit, for the acquisition, the equity which we have paid roughly INR 5,300 crores, so that was the consideration which we have paid for the equity and the remaining was the overall enterprise value, which we have decided. This is what we have agreed.
The debt which has come up, now that enterprise value is inclusive of entire CapEx, which we are going to do to complete the project because only 1,700 megawatt was operational. The remaining CapEx was pending. So that was what we have agreed with them was the enterprise value. Out of which, the equity which we have paid is INR 5,300 crores and the remaining which we are going to incur over next 3 years, 2 years for the -- making project operational.
With regards to the execution of PPAs, we don't foresee any legal trouble. In fact, what we are seeing now is that there is a -- because of the increase in power demand in the country, there is a resounding demand for PPAs. And of course, the INR 2, INR 2.5, INR 2.7 PPAs seem, to the discoms, a very, very cheap alternative to the INR 12, INR 13 tower they're buying from the exchange today. So discoms are looking very strongly to sign PPAs as quickly as they can. And because of that, we don't expect any issues with any of the PPAs in that portfolio.
The next question is from the line of Dhruv Muchhal from HDFC Asset Management.
Sir, 2 questions. The first is on the commissioned capacity of 5.4 gigawatt. What will be the annualized EBITDA run rate? So the reported number is about INR 3,500 crores. But I understand part of the capacity is for half of the year or, say, part of the year. So possible to share the annualized run rate?
Yes, yes. So run rate EBITDA will be roughly around INR 6,000 crores.
Sir, for this INR 5,000, the commission capacity of 5.4?
So the operating capacity is 7.2 gigawatts.
Yes. One minute.
Okay. Okay. We are including the capacity, which is almost commission, but because of the...
It's operating already.
It's already operating. Yes.
Okay. Okay. Fair enough. Okay. I was wondering coming from the end of Q4 numbers. So including this 1,700, which is almost commissioned, operating already, the run rate will be about INR 6,000-odd crores? The EBITDA -- annualized EBITDA rate will be about INR 6,000-odd crores.
It will be INR 6,200 crores for 7,200 megawatts of operating capacity.
Got it. right. So this will be reflected in the FY '24. Got it. And sir, the second question, more on the strategic side, is from reports, you understand that the larger group is planning to also enter into the green hydrogen side. So just to understand, given the requirement of solar and wind will be significant players, also plus some of the other technologies. So how does the structuring happen? Does Adani Green get to play a part in that hydrogen segment? Or will it be these other groups? I mean these, with other wind energy, will be supplied by Adani Green? Or does that happen, the entity which is putting the hydrogen plant?
So the hydrogen project is happening -- the hydrogen project is happening in an entity underneath the Adani Enterprise Limited, which is Adani New Industries Limited, ANIL. So -- I'm sorry, we cannot speak to the management of that because that's an independent business who will work out their independent business plan, the independent structuring. Where that suits them best or even from a taxation, et cetera, point of view because there is some GST complications and stuff like that.
But independent of how the contracting takes place, I definitely see that AGEL will have a very key role to play, either in the form of supply of power or in terms of providing the management services under the contract to that entity because the AGEL is where the expertise for solar and wind lies. And that entity will definitely rely on AGEL's expertise for executing whatever they need to do in terms of green energy.
Okay. So the second part, so first, I understand probably you will be setting up the plant and probably supplying the power. The second part is as a service provider for setting up the plant and operating them, right?
No. So whether or not the plants will be set up on AGEL's books or the books of ANIL is more a taxation structuring matter, which we cannot speak to because it's housed under a different entity. But we -- so -- but ANIL, I'm sure, will announce their own plans in due course when you will have better visibility on these items.
[Operator Instructions] The next question is from the line of Nikhil Nigania from Boston (sic) [ Boston Consulting Group ].
So wanted to understand what is the impact on returns on the project, especially given the case of the environment, whereas wind turbine prices are going up and interest rates also expected to increase. So what is the impact that you're seeing on your expected returns, especially on large projects like the manufacturing project?
So, Nikhil, we definitely -- there is a little bit of a dip in equity returns from what we would have if we had to set up those projects a year ago versus today. Of course, there is an impact. But from a capital point of view, there's 2 aspects to how we look at it. One, that we are able to set up the projects significantly because we have the land ready, we have the evacuation ready, and we have had all these years of expertise to be able to commission the project significantly before when the PPA deadlines are. So we're able to recoup a lot of these additional costs by additional power sales in either exchanges or otherwise, which offset the increase in cost of construction of the plant.
So we've been able to do that, which is something that we believe we will continue to be able to do. So that's for the offset of increased cost.
And with regards to the increased interest rate and the interest cost, we are able to raise funding in the market today as a company and one of the most competitive rates from any of our peers. We -- with the position that we have, with the significant -- but I was just saying about the increased interest rates, and we've been able to raise funds. Of course, the spread has increased a little bit for us, as it has for other people, and that would impact our equity returns marginally, but we don't see a significant difference because of that.
Understood, sir. Second question I had was on the line of receivables. So receivables, as you know, many investors have seen that as a challenge given the health of Indian discoms. So any improvement you see on that front? Or does that continue to be an area of concern for generators in general for India?
So SECI and NTPC have historically always paid on time. They did continue to pay on time through COVID and they still do continue to pay on time every single month, month-on-month, with complete regularity. That's where on an overall portfolio basis, that's where more than 80% of our portfolio is. So we're very comfortable and confident about that.
With regards to particular state discoms, 2 of which -- with 2 of which we had an issue in the past, it was Tamil Nadu and Telangana, both of them, we have been able to just recently receive significant chunks of money from -- so Telangana, we are 100% current now, both in terms of receivables of principal as well as the late payment surcharge, the LPS.
With Tamil Nadu as well, we have received a significant amount of money, about INR 400 crores. And we are also about at, I think, down from -- at about 1.5, 2 months, down from 8 months earlier. So we'll be, in fact, seeing a significantly better receivables position from the state discoms as well compared to a year or 2 ago.
Sir, one last question from my end. There were 2 regulatory or macro situations. One was regarding a habitat area of an endangered bird in Rajasthan, which was stalling construction of a lot of projects. And second, regarding the [ primary ] list of approved suppliers where Chinese supplies were in there. On both these fronts, do you see any challenges to existing pipeline projects? Or not a big challenge for Adani Green?
For Adani Green, particularly, it's not a challenge because as you know, this issue has been to the fore since the last 1.5 years to almost 2 years now. It's not something that is new. In the last 2 years, after this issue was raised and after this became an issue for the sector overall, we were still able to execute about 2,500 to 3,000 megawatts in the Rajasthan, Jaisalmer area because our plants fundamentally are outside of the GIB area. And that is not something that is a matter of issue or concern for us.
There are a few additional approvals that we now need procedurally to do some of the further work that we need to do. But I don't see that as stopping the work that we are doing. Of course, we'll have to go into an additional loop of approvals. And if managed properly, then it should not be any sort of a problem.
With regards to the ALMM, the certification that is required for Chinese modules, again, our projects in the pipeline will not get affected because we've made adequate measures and adequate needful in terms of what we need to source. But we do see that as a significant risk factor for the sector overall. But we've made our arrangements to that effect, so it should not be a problem for Adani Green's pipeline.
The next question is from the line of [ Goli Bank ] from Fullerton Fund Management.
Can you check on Slide 42, on the right-hand side column? As I mentioned of -- I think is about the funding going forward. In terms of timing , what kind of timing are we looking at?
Sorry, can you please repeat your question?
Okay. Let me turn to the slide again. Okay, on Slide 42. On the right-hand column at the bottom box, there's a mention of future dollar bond. I think this is referring to the restricted groups going forward, right? So that you can recycle the capital for more investments?
Again, I'm sorry. I'm not sure what slide you are referring to or what numbers you're referring to but...
You turn to Slide 42 of the presentation for the discoms.
We don't have -- we only have a 40-slide presentation for the earnings. Are you referring to some different presentation?
I got it from the website. Maybe I download the wrong...
Typically, the -- I mean -- sorry. Typically, the dollar bond issuance that we will have going forward is typically for recycling some of the Indian debt that we borrow at the senior debt level, at the project level. And the business model or the methodology through which we do it is we typically raise -- we used to typically raise Indian funding or even if it's international funding from international banks at the construction stage. And we replace that with long-term dated international bonds through the life of the asset. So that is something that must be what you are referring to. And yes, we do have a program year-on-year to be doing that on a consistent basis as our assets come online.
So you'll be similar to the RG1 and RG2 kind of framework, right?
Yes, they will be more similar to RG2 than RG1.
Okay. So for this financial year, how much is the cash flow going from the 2 RGs to the holdco?
Just let you know in one second. It will be a total of about $60 million, being upstream to the holdco from both the RGs.
This is the Adani portion, $60 million?
$60 million, yes, going up to the holding company.
Okay. Maybe just one last question from me. When you increase the ECB amount because the amount is from $1.3 billion to probably like $1.6 billion, right? From $1.35 billion to $1.64 billion. What's the reason for the increase? Because it's not a huge amount in that sense compared to the total.
We are setting up a new greenfield project, the project cost of which is $400 million. So we are -- the debt portion of which is $400 million. So we are raising $400 million of additional debt to fund the CapEx of the greenfield project that we're executing right now.
Right. It's a solar, 100% solar plant?
Yes.
The next question is from the line of [ Bharani Jakoma ] from [ Star Capital ].
Yes. Am I audible?
Yes, you are.
My first question is I just want to know the quantum of projects won since April '21 in bidding, say, either from SECI or from the States by Adani Green. That is essentially FY '22 in that financial year.
It's 600 megawatts.
Okay. Because this number is smaller than the number we used to have in the earlier years. Just trying to understand the impact on the 600-megawatt of projects due to this ALMM list. Someone had also alluded to it in the earlier question. So essentially, the 600-megawatt projects need to procure modules only from the list approved by the government, if I'm not wrong, correct?
So out of this, we need 150 megawatts that need to be procured only from the list. And the other 450, we are open to procure from outside.
Right. And so essentially, any [ bid ] that is coming up from now would require it to be adhering to that list, if I'm not wrong?
That is correct. That is correct, yes.
So with the industry seeing close to, say, 10, 15 gigawatt of awarding even in FY '22, do you think we have enough capacity -- of course, we don't have enough capacity. But what kind of delays in project execution would happen because of this? How is it going to be feasible from the government side to ensure timely project execution?
So I think there is definitely a lot of ramp-up going on significantly on the manufacturing side by a lot of people. Certainly, certainly, we are doing it. And it becomes a question of how much capacities will come online, manufacturing capacity, by what point in time. Sure, there may be a few months of dispatches here and there, but we do think that with the award of the PLI and with all of these things that a lot of these projects would have modules available in the near future.
Okay. So then the next question is at what point in time or by the end of each year, how much do you think will be the module assembly or manufacturing capacity in India according to you, say, by end of '23 and '24?
I think by about FY '25, we should reach about a 40 gigawatt per annum capacity in the country.
Okay. Right now, it would be around 10%, right?
Right now, it would be around 10, yes. You're right.
Okay. So essentially, we are dependent on the capacities coming up due to the PLI schemes?
Due to the PLI schemes and people setting it up independent of the PLI scheme as well. There are some parties who are setting up module and sell facilities, independent of PLI schemes under various state government incentive schemes and stuff like that. So those are coming up independently. And PLI schemes are more kind of integrated capacities, which are coming with that.
Sure. The second question is on the expected amount of awarding activity by either, say, SECI or states. We have seen a little bit of a slowdown there. So what would be the expectation in the next 1 or 2 years, FY '23, '24?
The slowdown has mainly been on account of COVID and on account of non-clarity of rise in power demand because of the uncertain scenario caused by COVID. But now I think it is abundantly clear to all the state distribution companies as well as the central government companies that power demand is significantly increasing in the country and that it will constantly and consistently continue to rise, which is why we're expecting very, very significant auction capacities coming from state discoms and SECI and NTPC this year.
While I cannot speak through a certain specific number because I cannot speak on behalf of SECI, NTPC or the state discoms, but we expect that number to be pretty significant.
Okay. Since you alluded to the power shortage scenario, since you mentioned we are selling inform power in the short-term market, why do you think, even despite that, there is still shortage and then the power load shedding? Is it because of the time this much because solar would be selling probably in the daytime and probably the peak demand is in the evening? Is it because of that?
That's a part of the reason, but there's also the quantum of demand is significantly higher than the total quantum of supply. So there is an overall issue also that even in the afternoon times, if you see prices are still INR 8, INR 10, INR 12, even after selling all this power of the exchange. So there is a gap in the afternoon. And there is a much higher gap in the evening. So the gap is just there consistently throughout because of the rising demand.
Okay. Okay. And you would be selling in the GDAM market, on the GTAM market, sir?
We sell on both.
Could you give us a little bit of color on why you would prefer one over the other? What are the merits or demerits?
I mean if you want details around the GTAM, GDAM market, then we're happy to set up a separate call, I think, and for -- I'm just conscious of the time of everyone on the call right now. And you can reach out to our management and to Viral. And he has a relevant team from our side to walk you through the nuances of both markets and the pluses and minuses of each.
The next question is from the line of Nirav Shah from GeeCee Holdings.
Most questions have been answered. Just a couple of them. Sir, in your opening remarks, you mentioned that you'll be adding around 3 gigawatts every year. But say, for this year's exit capacity, would that also include that 1.6 gigawatt because that's a spillover from last year?
Yes. Overall, this year, we are talking about 2.2 gigawatts and plus spillover of last year.
So you'll be adding 3.8. So you'll expect that close to 9 gigawatt?
It should be around 9.2.
9.2 gigawatt. Got it. That's fine. And just the second question is on our group press release at the time of [indiscernible] or IHC investing $2 billion in a group. We have also mentioned that both IHC and Adani portfolio are looking at strategic opportunities in India, Middle East and Africa. So is Adani Green also looking at outside India opportunities in that sense? Or it's more pertaining to the other 2 [indiscernible]?
So our focus, mainly Adani Green, particularly remains India and the opportunities in India. There are a lot of different opportunities that do come up from time to time outside when -- if it is not one profitable second material in terms of size and volume, we do not participate in it. If there is an opportunity which comes tomorrow in some other place, which is most profitable and significant in terms of volume, then we may look at it. But the focus -- the predominant focus remains India and is expected to continue to remain India as we go forward.
The next question is from the line of Subhadip Mitra from JM Financial.
My question was a little bit more on the lines of how do you see the transition of the solar module technology from a Monopod to TOPcon versus AGT? How do you see these technologies maturing? Or is there any preference that you have in terms of your own strategy towards which of these technologies with regard to your own manufacturing plant?
So we think that a year or 2 from now, TOPCon will start to become the mainstream and 3 to 4 years from now, AGT will start to become the mainstream from a Chinese module manufacturers perspective.
Now looking at a lot of different scenarios and a lot of different constraints around the access and availability and the cost of these technologies in India, we are in the process of evaluating in detail the pros and cons of a Monopod versus a TOPCon versus an AGT for an investment that we are making on the manufacturing side as we go forward.
And we're still under that evaluation. We don't have -- we have not made a clear decision on that, but we should be in a place to be able to make a decision on that very soon. But in principle, TOPCon and AGT do seem interesting and attractive. And while there is a few complications that come with it, there is a merit in terms of going for those technologies as we go forward.
Understood. So my understanding is that transitioning from a Monopod to a TOPCon is doable and easy to do, whereas AGT probably is a completely different setup. So if one goes in one direction...
Even TOPCon is -- while, yes, not as different as AGT, it is significantly different still. So there is a couple of additional process steps involved for which the expertise and experience is not there in India right now. So one has to weigh that very carefully before making an investment decision on the manufacturing side. Because you don't want to set up a technology which you can't run effectively going forward. So that's the thing that we need to consider, yes.
So if one goes in one direction in terms of setting up a manufacturing technology based on one tech, it would be difficult to certainly transition into a company with different technologies. Is that -- that's what you're trying to develop.
Absolutely, yes.
Got it. Got it. Second question is, I think one of the earlier questions, you were speaking more in detail about the kind of peak demand scenario that we are seeing today. And just wanted to get your perspective on the way demand is growing today and it seems to be more on the peak side and probably more during the evening hours, are you sensing a higher demand for future tenders, which would be on solar plus battery type or solar plus storage? Those kind of bids would now kind of become the mainstream?
So solar and wind will continue in terms of the volumes because India -- the way we look at it and the way we look at the landscape is India, as a country, and of course, with different nuances in different states and different discoms, all of them need everything. They need solar. They need wind. They need thermal. They need solar with batteries. They need solar and wind hybrids. They need hybrids with battery. They need hybrids of renewables with thermal combined, which was the RTC bid, which was brought out by SECI. All of these different sort of bids will be required.
And of course, a particular discom, because of their own nuances, might need one more than the other. But in general, the basket of solutions will be needed to be brought out by SECI and NTPC for solving the demand needs of all the discoms. But everything will have to go on in parallel, basically.
Understood. Last question is between a solar plus battery and hydro pump storage kind of a solution, is there any preference between the two? Do you actually see any one of them getting more economical with time?
Between which two, I'm sorry?
So you have pump storage versus solar plus [indiscernible].
Yes, yes, yes. so again, I think that both will have their own uses and niches. I think if something -- if we want a gigawatt-level scale stable power, then pump storage is a solution right now because solar plus battery still at a gigawatt scale, you can do 100 to 200 megawatts here and there. But at a gigawatt scale, that becomes difficult to implement and in terms of both availability and cost.
So we see today, on an independent basis, pump hydro being a little more competitive compared to solar plus full battery. But of course, with the cost curve of batteries coming down, that equation may change in the near future.
The next question is from the line of Girish Achhipalia from Morgan Stanley.
I just had a couple of questions. So one was this comment made around the debt. And you said a large portion of your debt is fixed cost. So when you say that it's forever fixed cost, I mean, is it like you have some 3-, 4-year arrangement and then it rises? Or how does it actually work? Or is it still perpetually until -- for the life of the debt, it will be 8.8% only? And second was, what is the new debt costing you for the new projects? I may have missed that, sorry.
So in broadly, I mean, we can have specific numbers shared with you offline. But just from a guidance perspective, there is about 20%, 25% of our debt, which is in perpetuity fixed cost, which is basically the RG2 type construct where we have 20-year fixed cost paper.
A lot -- almost entirely all the debt that we are issuing going forward is in that construct, where for the life of 20 years or 22 years, the cost of debt will be fixed, which is the senior debt that we raised at the project level.
We also do raise some debt in our projects from some of the Indian banks. Those facilities are more fixed in nature for a 1-year rolling basis. So the cost of those facilities is fixed for a year and is linked to some sort of an RBI rate. But from an overall percentage perspective, it's a much, much lower percentage in our portfolio.
We will also be issuing NCDs domestically, which will be fixed term paper. As we go forward, we are also raising some holdco-level debt, which is again also fixed for a period of 3 years and get to refinance after 3 years and is again fixed for a forward period of about 3 to 5 years.
So that's the basket of different debts that we have. But more or less, what we have today is fixed, more or less, this is broadly speaking, and what we will have in the future as well will continue to remain fixed for the tenure of the PPA. Because that's an underlying capital management philosophy of Adani Green, where we do not want to introduce debt risk to our equity investors.
So that continues as a fundamental philosophy from -- of going forward cost of debt basis, we typically are raising at 7.5% to 8% levels for the projects that we are closing going forward in -- with the Indian banks and about 8.5% to 9% circa rates from international bond raises.
This is a full year basis.
Full year's basis.
And just to add to what Sagar Bhai has told. During the construction, we will be open the letter of credit in favor of supplier, which is being done at the 50 bps and the discount, whereby our interest cost is 4.5%. So almost for a period of 9 months to 12 months, we have a cost of around only 5% to 5.5% during the greenfield construction. So this is the most economical way of optimizing the overall debt portfolio cost.
Okay. And Sagar, the other question was on M&A. So when you're looking at some of the recent deals that are happening, whether it is Shell or Tata Power, et cetera, I mean, are the deals that you are -- is the M&A landscape becoming more challenging in terms of finding reasonably valued deals? How is it right now that you are looking at some -- I mean [ these are ] inorganic growth aspiration, probably lower than it was, let's say, a year back for you guys in terms of finding the right deals.
And second part of that question was not from an equity raising perspective, but are you getting a lot of incoming inquiries in terms of maybe participating with you? I mean Total was a big transaction, which has already happened, but are you getting similar interest again and again, I mean, as the renewable story plays on?
So two questions of yours. First, M&A opportunities. We are very clear. We have been historically and we continue to be very clear that we will do inorganic growth only when 2 conditions are met. One is that the asset quality on the ground is fundamentally robust and very, very solid because we look at these assets as 35- to 40-year assets and not just a 20-, 25-year [ PPLI ]. So that continues to remain as a very, very important gating item for us.
In addition to that, we also make sure that the value at which we're able to do it is something that is finally accretive to equity because no point growing megawatts when value does not enhance. So that's -- those are 2 aspects that we are very clear about, which we've historically been very clear about as well, which is why you would have seen that we've done very specific, particularly chosen M&As where we feel that there is an opportunity for a significant amount of value creation.
That is something we'll continue to do as we go forward. There are a lot of platforms available in the market who want to sell, but we will be very choosy, and we will pick the right ones that make sense for our enhancement of equity value. That is number one, answer to your question.
Your second question was, again, can you please remind me? Inbound interest to -- into our platform. And sorry, so for that, again, we have always been and we still today continue to get a lot of inbound interest. Abu Dhabi's investment via IHC of $500 million into Adani Green has been a second set step, so to speak, for us after Total. Still, there is a lot of inbound interest, but our platform does not need equity to grow.
So we're in a position to be very careful in terms of who we choose to be our partner as we go forward because we don't need the money. But the strategic aspect and the strategic rationale of joining hands has to make sense for us. And that is something that we -- which is the case of Abu Dhabi is something that we will continue to always look for -- as we look at other alternate opportunities as well. But from our point of view, we are not actively looking to raise equity because the platform is not needed.
The next question is from the line of Apoorva Bahadur from Investec Capital Services.
Right. So I'll quickly ask one last question, I think, before we close the call. So just wanted to understand, we are hearing that SECI is going to come up with [indiscernible] lending tenders. So are we looking at that opportunity? Any idea on what size that could be? And will you be working with the other group entity on this?
Answer to all of that is yes. The size is a reflection of what the bid comes out and what we're able to win. But we will be -- we will try to look at a significant quantum in those bids as we go forward.
Great. Great. I think that's all from our side. No further questions. We can close the call, Rosia.
Sure. Would management like to give any closing comments?
No. Thank you, everyone, for joining, and we appreciate your time. And we look forward to building on whatever we've been doing at Adani Green. It's a very exciting story. It's something that we are very well prepped for. And we will continue to execute the way that we have over the last couple of years because at the end of the day, that is what matters. And setting up capacity on the ground and growing our portfolio, our megawatts, our free cash flow and our EBITDA remains the focus from a management point of view. We'll continue to build on that and hopefully deliver consistently exceeding performance year-on-year. Thank you, everyone, for joining, and thank you for your time.
Thank you.
Thank you. On behalf of Investec Capital Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.