ReNew Energy Global Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
June 6, 2024

Key Takeaways

  • Renew Energy has increased its fully contracted portfolio to 15.6 GW and holds a pipeline of over 21 GW of auction-wins expected to be operational by FY2029.
  • The company targets 16%–18% annual EBITDA growth through FY2030, financed by internal cash flow and disciplined asset recycling, without issuing new equity.
  • Asset recycling will monetize about 2 GW of projects by FY2029 at ~9× EV/EBITDA, boosting reinvested IRRs to 20%–25%.
  • FY2024 marked Renew’s first profitable year since listing, delivering INR 65.6 billion adjusted EBITDA, INR 13.7 billion cash flow to equity and INR 4.1 billion net profit.
  • A record 62 GW of Indian renewable auctions in FY2024, continued policy support, all-time low solar and battery costs and rising industrial power demand underpin the long-term outlook.
AI Generated. May Contain Errors.
Earnings Conference Call
ReNew Energy Global Q4 2024
00:00 / 00:00

There are 8 speakers on the call.

Operator

Thank you for standing by, and welcome to Renew Energy Global Plc 4Q FY 'twenty four Results and Long Term Outlook. All participants are in listen only mode. There will be a presentation followed by a question and answer session. I would now like to hand the conference over to Mr. Nathan Judge.

Operator

Please go ahead.

Speaker 1

And thank you, and good morning, everyone, and thank you for joining us. Today, we're going to have a little bit of a different format from our previous earnings call, given the meaningful gains the company has made in securing long term growth as well as the dramatic improvement in the fundamentals of the Indian Renewable Energy market. We wanted to share with you our long term outlook in addition to the normal earnings review and annual guidance for fiscal year 2025. We did put out a press release announcing results for the fiscal 2024 Q4 and full year 2024 ended March 31, 2024, last night and a copy of this press release and the earnings presentation are available on the Investor Relations section on RENEW's website at www.renew.com. With me today are Simlat Sinha, Founder, Chairman and CEO Kailesh Vashwani, our CFO and Vashali Nigam Sinha, Co Founder and Chairperson of Sustainability.

Speaker 1

After the prepared remarks, which we expect will take about an hour, we will open up the call for questions. Please note, our Safe Harbor statements are contained within our press release, presentation materials and materials available on our website. These statements are important and integral to all our remarks. There are risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward looking statements. So we encourage you to review the press release we furnished in our Form 6 ks and the presentation on our website for a more complete description.

Speaker 1

Also contained in our press release, presentation materials and annual report are certain non IFRS measures that we reconcile to the most possible IFRS measures, and these reconciliations are also available on our website in the press release, presentation materials and our annual report. It is now my pleasure to hand it over to Sumant.

Speaker 2

Thank you, Nathan. Good morning and good afternoon and good evening, everyone, and glad to have you all on our earnings call. Turning to the presentation, just to talk about the first couple of pages. We are unwavering in our purpose of creating a carbon free world one step at a time. Our focus is on growth and that adds value to all our stakeholders and most importantly to our shareholders.

Speaker 2

As a renewable energy leader in India and the Global South, we aim to further enhance our position in the coming years. We don't pursue scale or market share for its own sake. Instead, we see growth opportunities where the return exceeds our cost of capital. Fiscal year 2024 started off with a bang when the Ministry of New and Renewable Energy or MNRE announced 50 gigawatts of annual auctions. This was almost triple what had been auctioned off the prior years.

Speaker 2

Although the target was to achieve 50 gigawatts, India surpassed this goal, auctioning over 62 gigawatts of RE capacity during the year. Since April 2023, we have won about 8 gigawatts of new capacity, which is around 60% more than our portfolio was as of March 31, 2023. We have signed PPAs of about 2.2 gigawatts of capacity so far in FY 2025, increasing our contracted portfolio now to 15.6 gigawatts. For the remaining 6 gigawatts or so that we have done and have a letter of award in hand, we expect to sign PPAs over the next 6 to 9 months. Until then, we are going to refer to them as our pipeline.

Speaker 2

We are on pace to deliver on our pipeline of over 21 gigawatts by 2029, which is more than double the amount we finished fiscal year FY 2024 at. We are further propelled by a very exciting macroeconomic environment. We expect consistency in policy making and a continued strong push towards renewable energy. On the demand side, we also anticipate a surge in industrial demand growth in sectors such as electric vehicles and data centers, which will not only boost GDP, but also increase power demand substantially. On costs, solar cell and module prices are at an all time low and battery prices have dropped by about a fork in just over a year, helping to further improve the returns on projects under construction.

Speaker 2

The fiscal year ahead promises to be even more exciting and full of opportunities than the one that we just completed. On Page 7, in this call, we want to address some key items that we believe the market has not recognized and given value for yet. From where we sit today, we see a clear pathway to 16% to 18% annual growth through the end of this decade. Importantly, this growth will be through internal cash flow generation and asset recycling and we do not intend to issue any new shares. We also expect to meaningfully improve our leverage ratios during this period.

Speaker 2

As mentioned earlier, our fully contracted portfolio stands at 15.6 gigawatts. However, we have also won an additional close to 6 gigawatts in a very favorable bidding market for which we have letters of award in hand and expect to sign the PPAs in the next 6 to 9 months. Combined, we have over 21 gigawatts, which provides clarity on growth as well as increased confidence of execution and returns. Importantly, the next 10 gigawatts of growth have significantly higher returns than the 9.5 gigawatts we had operating as of March 30 1. Asset recycling is a key part of our strategy as it not only provides a lower cost of equity to fund growth, but it also enhances returns given the meaningful premium we receive over billed costs.

Speaker 2

We can increase the IRR range to 20% to 25% on average after reinvestment of the equity and gains on sales. We expect to monetize around 2 gigawatts of assets by FY 2020 9. We also want to address some lack of clarity about our accounts. Put simply, there is a significant amount of investment and costs that we will incur in the near term, such as debt and un allocable overheads for our platform. However, they create significant competitive advantages and are key to long term value creation.

Speaker 2

We will provide some analysis that shows that for our assets operations for over a year, those earn a healthy ROCE or return on capital employed of around 11% versus about 8% at the consolidated level. We contribute about INR 17,000,000,000 as CFE compared to our FY 2024 consolidated CFE of RMB 13,700,000,000. And these assets only have a net debt to LTM EBITDA ratio of 5.3 times versus 8.2 times at a consolidated level. All of these are meaningfully better than the ratios that would be calculated from our consolidated accounts. As we continue to grow through this decade and more of our assets become operational, the consolidated account ratio will improve materially.

Speaker 2

Turning to page and Kailash will talk about some of these numbers later on. Turning to Page 8, since our listing about 3 years ago, we have delivered about 18% to 19% annual growth in operating megawatts as well as adjusted EBITDA. With the projects under construction, recently signed contracts and recent wins that we expect will receive contract in this fiscal year, we believe we can deliver 16% to 18% growth in adjusted EBITDA through the remainder of this decade. We have invested in the technology, our people and in building a platform that can deliver truly at scale. Our EBITDA growth is outpacing the growth of our operating megawatts and indicates that we expect to improve our margins even though we are making investments to activate growth in future years.

Speaker 2

We anticipate that our current pipeline, which includes about 6 gigawatts of uncontracted auction wins, will generate approximately INR 142,000,000,000 to INR 150,000,000,000 in EBITDA by the end of this decade, once fully operational. This will be over 2 times of the FY twenty twenty four numbers we just reported and close to 3.5 times growth since our IPO. Turning to Page 9. As part of our commitment to create shareholder value, we will continue to pursue the lowest cost capital to fund our growth. We can self fund about 1.5 to 2 gigawatts of assets on our own with our cash flow to equity without needing to raise equity or recycle capital.

Speaker 2

What this means is that we can achieve about 17 gigawatts to 18 gigawatts of operational capacity by FY 20 29 without needing additional equity. However, we have observed that our differentiated development capability is at a premium, both in the bidding market where we are seeing returns above recent historical norms as well as in premiums to book value being offered for our assets. Therefore, we are pursuing a plan to accelerate our growth by building an additional 500 megawatts to a gigawatt each year, which will be funded by asset recycling. This addition is likely to have an exponential growth effect on our CFE and will have a higher growth trajectory as we add capacity. Through recycling, we can build over 19 gigawatts by selling 1.5 to 2 gigawatts 2.5 gigawatts of assets at 2 times book value, which would equate to around 9.5 times EV to run rate EBITDA.

Speaker 2

We emphasize that our strategy to fund growth through capital recycling. This is important. Not only does it provide a much lower cost of equity than issuing shares, it also enhances the expected IRRs meaningfully after reinvestment. On Page 10, we aim to demonstrate that our projects, once stable and fully operational, are profitable. While Kailash will cover this topic in more detail soon, let me share some key highlights.

Speaker 2

We started this fiscal year with 7.6 gigawatts of operational assets, excluding the 400 megawatts we sold during the year, which delivered an adjusted EBITDA of about INR66 $3,000,000,000 in FY 2024. The net debt to LTM EBITDA ratio for these projects was about 5.4x and the return on invested capital was around 11%. And these assets delivered a stable CFE of about INR 17,000,000,000. Turning to Page 11, our growth estimates. We aim to grow our EBITDA by 16% to 18% annually over the next 5 years to about INR 142,000,000,000 to $150,000,000,000 on a run rate adjusted EBITDA in FY 30.

Speaker 2

Additionally, once operational, our 19.4 gigawatts should deliver approximately INR 35,000,000,000 to 42,000,000,000 in CFE, which would be an annual growth of over 25% per annum. We expect a return on capital employed between 11% to 12% for the consolidated results. We are also mindful of our overall leverage levels and will look to improve the consolidated leverage net debt to EBITDA ratio by about 25% from current levels as well. For FY 2025, we expect EBITDA of INR 76,000,000,000 to $82,000,000,000 and to operationalize $1900,000,000 to 2,400 megawatts of new projects. In addition, we also expect to deliver CFE of INR $12,000,000,000 to $14,000,000,000 which would be about 30% growth after adjusting for the gain on sale we recognized in FY 2024.

Speaker 2

On Page 12, we reaffirm our commitment to pursuing only the highest return opportunities where we can deliver returns above the cost of capital. The return on capital employed for projects commissioned in FY 2023, which are now delivering stable EBITDA is around 11% compared to our weighted average cost of capital of around 8.75% to 9.25%. Additionally, our in house wind EPC, O and M capabilities combined with digital capabilities empowered us to engage in firm power or complex projects that have the highest return and constitute the fastest growing segment of the market. Over the years, we have partnered with both prominent domestic and international investors who have shown interest in our assets and provided us with equity for growth. This strategy has allowed us to achieve a higher return on invested capital along with lowering our overall leverage.

Speaker 2

Now turning to the highlights for the quarter and full year 2024 on Page 14. I am pleased to report that for FY 2024, we reported our 1st profitable year since listing, a significant milestone showcasing our inherent CAD generation capability. Furthermore, our EBITDA was at the top end of the range for EBITDA and ahead in CFE. We added 1.9 gigawatt of operational capacity in line with projections and excluding the impact of gains from asset sales reported an adjusted EBITDA of INR 65,600,000,000 dollars compared to the top end of our initial EBITDA guidance range of INR 66,000,000,000 Additionally, we exceeded our CFE guidance reporting INR 13,700,000,000 which includes an INR 3,700,000,000 gain from sales. We are also reporting our 1st profitable fiscal year since listing with a profit of INR 4,100,000,000 or $0.12 of EPS.

Speaker 2

Our contracted portfolio now stands at an impressive 15.6 gigawatts, including the 2.2 gigawatts of recently signed agreements. Turning to Page 16, we have a summary of updates from our businesses. Firstly, the current renewable energy landscape is one of the best we have ever seen with over 62 gigawatts of options in FY 2024 and more than 50 gigawatts additional already in the pipeline for FY 2025. In addition, high power demand has pushed merchant prices up, which is driving higher auction tariffs as well. The demand for electricity is at an all time high.

Speaker 2

Secondly, our differentiated platform positions us as a leader in firm power and complex projects, leveraging our capability to combine wind development with our digital capabilities. There are fewer takers of these firm power or complex projects given the challenges in execution and hence we see higher return opportunities in these kinds of projects. Finally, our returns are bolstered by the decline in solar module and cell prices alongside a significant reduction in battery prices. On Page 18, let me first delve into the auction market. This has been one of the best auction markets we have seen since our inception.

Speaker 2

There was an over fourfold increase in RE Auctions during fiscal year FY 2024 compared to fiscal year 2023 and another 50 gigawatts has already been announced and should be completed in the current fiscal year. The share of firm power projects grew the most with over 23 gigawatts auctioned in FY 2024. While the overall market has grown for sure, we noticed that the subscription rate, which is a measure of competition levels, is generally lower, particularly in the firm power complex project auctions. Although there are enough takers for vanilla wind and solar projects, from the more complex projects saw less than one time subscription. We expect this trend to continue due to the limited capital, bandwidth, project size under development and resources among our peers.

Speaker 2

And therefore, we should see lower competition and hence possibly better returns. Turning to Page 19, India's FY 2024 GDP grew by 8.2 percent year on year, surpassing estimates. Thanks to this GDP growth and expansion in purchasing power of the Indian consumer, we see a consistent rise in power demand, which has also risen around 8% on average over the past 4 years. Notably, despite a rapid expansion in power consumption, India still has one of the lowest per capita electricity consumption rates in the world. On Page 20, India's peak demand hit 2 new highs in May of this year and with that came outages and spikes in merchant power prices as well as regulatory caps, evidence that demand is outpacing supply.

Speaker 2

Despite this high demand, supply will take time to catch up, including that of renewable energy, the fastest and cheapest solutions. With the likelihood of continued shortages and upswing in the average merchant prices and lower competition in auctions, it is reasonable to expect auction tariffs will also continue to rise in the medium term. On Page 21, due to an increase in power demand and with the mandate to reach its 2,030 targets of 500 gigawatts of installed RE capacity, MNRE, the Ministry of New and Renewable Energy, initiated a 50 gigawatt RE auction target last year appointing 4 different agencies to bid on this capacity. These agencies along with the state distribution companies have surpassed the overall target in the 1st year auctioning over 62 gigawatts of renewable energy capacity nearly a fourfold increase over the last several years and the most ever. We are tracking another 50 gigawatts of auction that have been announced for FY 2025.

Speaker 2

Notably, the amount of firm power complex or complex capacity has seen the largest increase in FY2024 over FY2023, with as I said earlier about 23 gigawatts of firm power capacity auctioned during the year and around 9 5 gigawatts already announced for financial year 2025. Given our differentiated capabilities, we have been able to capture more of these higher return projects than our peers. We capitalized on the expansion in auction volume by winning about 8 gigawatts of RE capacity in a single year. This was nearly 60% of our contracted capacity at the beginning of fiscal year 2024. Of this 8 gigawatts, we have signed PPAs for about 1.8 gigawatts and another 4 38 megawatt agreement with a single corporate customer.

Speaker 2

Of these 8 gigawatts, over 5.2 gigawatts were firm power projects, which should have a higher return than plain vanilla projects. Turning to Page 22, the total addressable market has expanded, but there is limited capability and bandwidth amongst peers for these firm powered or complex projects. Most competitors aside from the top 3 or 4 have struggled to keep up with the rapid increase in auctions, resulting in lower competition as evidenced by falling subscription rates. The Vandala Wind, Solar and Hybrid Auctions have had oversubscription rates of 2.8 to 3 times, whereas some firm power projects have been less than 1 time subscribed. Limiting factors such as capital, scale and capability contribute to this trend.

Speaker 2

But our key differentiator is our in house wind EPC team. We have been investing in developing a strong platform that can deliver large scale projects at the lowest cost. Our in house wind EPC and solar EPC and land acquisition teams ensure seamless delivery on this front. Turning to Page 24, which further outlines our differentiated platform and ability for firm power complex projects. Our Wink EPC expertise bundled with our digital capabilities provides us with an edge in firm power complex projects.

Speaker 2

We can deliver these projects at the lowest cost in India and achieve superior returns, which are better than Manila projects. Our portfolio combined with our pipeline of over 21 gigawatts includes now around 1 gigawatts of firm power projects or about a third of our total projects under construction and in the pipeline. Competition in this segment, as I said earlier, is low and our in house digital map further enhances return through determination of the optimum mix of wind, solar and battery. Our ability therefore to managing wind EPC and our digital platform enables us to achieve superior returns in this segment of the market. In addition, I should say that we now participate only in central bids as the counterparty profiles enable us to source cheaper financing and further we now only take on corporate PPAs of at least 50 megawatts with mostly now marquee international customers.

Speaker 2

We invest our capital in the highest return opportunities and currently firm power projects provide that avenue. Turning to Page 26, we are the largest wind EPC developer in India with over 4.7 gigawatts of operational wind projects and our nearest competitor is only about half of our size. Since our inception, India has added about 29 gigawatts of wind capacity with 4.7 gigawatts contributed by us or almost 17% of the total as market share for us. Wind projects are complex due to design intricacies, lead time of site selection, the fragmented nature of sites and very importantly right of way related matters. Despite these challenges, wind has the lowest LCOE for peak demand, even better than solar.

Speaker 2

That may sound odd as normally peak demand in the U. S. Or Europe is during the day. In India, peak demand is during 6 to 8 a. M.

Speaker 2

In the morning and 7 to 9 p. M. In the evening, times when solar is really not generating. Our decade of experience and data from over 2,200 wind turbines enables us to optimize bidding models and select the best sites for upcoming projects, providing us with significant competitive advantages. Further, we have realized that we are able to better manage operational projects and we have found that we maintain projects ourselves at a 25% to 30% lower cost than if outsourced to OEMs.

Speaker 2

It also allows us to actually generate higher uptimes and generation from the wind turbines that we manage ourselves. We will continue therefore to focus on enhancing our wind capabilities and grow this capability by developing more firm power projects. Turning to Page 27. The combination of wind, solar and battery storage is the best renewable energy solution for firm power, particularly compared to solar with pumped hydro alternators. Wind is a much more cost effective solution than pumped hydro for meeting demand when solar is not producing.

Speaker 2

With a combination of wind, solar and batteries, we produce the cheapest firm power from renewable energy in the country. Our analysis concludes that the overall cost of pumped hydro plus solar is still 10% to 15% higher cost than what we can produce with wind plus solar and batteries. Moreover, PHP sites are limited and have lead times of over 3 to 5 years, making it challenging to deliver electricity in 18 to 24 months as required by the PPA's terms. While for batteries, the fall in prices has ensured that the cost of using batteries as a solid solution is far more economical than it was before and that the likely continued improvement in technology for batteries and reduction in costs, this shift towards wind and solar and batteries is likely to continue to take place in the future as well. Turning to Page 28.

Speaker 2

Our digital capabilities provide us with a unique advantage. Our digital lab is able to use complex simulations through triangulation of proprietary data from our over 2,200 plus wind turbines across all of the country, our 16,000 plus solar inverters and 150 plus wind loss. Through this in-depth analysis, our digital engines can do predictive modeling as well as do backward testing of our models, allowing us to bid more effectively in auctions, achieve higher tariffs and reduce execution rates. Additionally, we can minimize battery use and rely more on wind and solar production, which are cheaper sources of capacity through our digital analysis. Our digital KP capabilities enable real time monitoring plant performance, optimizing delivery with minimal downtime.

Speaker 2

We therefore view our digital systems as a significant competitive edge as there is even greater demand for complex power solutions going forward. Separately, Renew is also the only renewable energy company to have received the prestigious Global Lighthouse Award by the World Economic Forum and we have received this award not just once, but twice. Turning to Page 31. Access to transmission interconnection is also critical to ensure on time delivery for power projects. Our efforts to secure access to connectivity for future projects growth start years in advance with utilizing our proprietary data and local expertise to identify the upcoming substations in a region where we can get the highest PLS or plant load factors by minimizing transmission line additions.

Speaker 2

Most interconnection access in India has already been allocated through till fiscal year 2027-twenty 28. Put differently, if you wanted to bid in the auction market today, your projects would likely not be able to get access to the grid until FY 2020 8 in competitive PLF locations. Foreseeing this bottleneck, we have secured access to over 10 gigawatts of connectivity beyond our operational projects. We have visibility of interconnection access for uncontracted pipeline. We actively secured access to interconnection hubs or acquire land where hubs are expected to be built, ensuring our projects can be connected once fully built.

Speaker 2

In addition, having this clarity of interconnection and site development provides us greater confidence while bidding. It also allows us to be more competitive if we have blocked more competitive PLF sites than our competitors. Our in house project development teams ensure that we are ahead of competitors in securing land, transmission and interconnection for the bids that we carry out in the future. And this is actually what helps us also get the higher IRRs on our projects compared to our competitors. Turning to Page 32, in terms of returns on our projects, One of the most critical factors impacting returns is cost.

Speaker 2

In the past year, solar module and cell prices, which represent 40% to 50% of the solar project costs, have fallen by over 50% or more, which has resulted in over $100,000,000 worth of CapEx savings on fiscal year 2024. When looking at our CapEx forecast, do note that we have assumed higher module prices than the current spot prices. If we do indeed realize current spot prices over the next 4, 5 years, our total solar module CapEx would be about 50% to 20% lower than our predictions. Battery prices have also fallen significantly as well. And as I said, the trend continues to be downwards for batteries as well.

Speaker 2

Turning to Page 33, supply chain challenges especially in solar remain prevalent in India. The implementation of the ALMM or the approved list of modules and manufacturers in April this year has restricted most of the imports of modules into India. To provide a solution to ensure security of supply, we now have our own manufacturing facilities, which are currently producing modules at cost lower than imports after including import duties, even where imports are possible in a very restricted sense. And of course, for future projects that is not even possible. While India has about 35 gigawatts of capacity, much of it is old higher cost technologies or is exported or caters to rooftop and the smaller module requirements, leaving only about 12 gigawatts of supply versus a much higher domestic demand.

Speaker 2

We are transitioning to Topcon technology, which is at least 2% to 3 percent more efficient than existing Monopurm technology to further increase our cost advantages over our Indian peers. We are interested over time in monetizing a portion or even all of our solar manufacturing plants as part of our capital recycling strategy, securing of course the supply to our own plants. Our assumptions while bidding include buffers over the spot prices for sales and this helps insulate us from a possible uptick in prices come execution time. Turning to Page 34, interest cost is our biggest annual expense. Over the past year, we have ensured that the interest rate of refinanced debt is lower by refinancing old high cost debt as well as by shifting to cheaper domestic financing.

Speaker 2

Both international and domestic lenders continue to show a lot of interest in our projects and the domestic debt liquidity at a high, we have signed over $13,000,000,000 worth of debt funding MOUs in a single year with very high quality counterparties such as the Asian Development Bank, Sotheby General and Power Finance Corporation and REC. Additionally, Indian banks are now more open to renewable energy projects and are not only offering competitive terms, but also larger check sizes in line with the larger auctions and project sizes that we are now doing. We have no immediate refinancing risk and we continue to be prudent in our approach to ensure that we can optimize our cost through tapping a very, very pool of capital. With that, let me hand it over to Kailash to discuss more about the financing strategy. Kailash, over to you.

Speaker 3

Thanks, Sumant. On Page 36, we'll discuss 3 themes: profitability, leverage and funding growth, wherein we'll showcase the returns from our operating projects, analyze the leverage of our operating portfolio and outline our growth funding strategy. Firstly, turning to profitability and leverage. On Slide 37, based on reported financials, some may view our leverage high and profits low. However, these ratios are distorted by growth, including debt for projects that are not yet completed and producing EBITDA, as well as the cost related to our platform that delivers tremendous value longer term.

Speaker 3

We will show on this slide the leverage on assets in our portfolio that have been operating for at least 1 year only have a net debt to last 12 months EBITDA ratio of about 5.3 times. The ROCE or the return on capital employed of the same group is around 11%. On a consolidated basis, the returns of these projects are partially offset by platform costs, new businesses and our under construction portfolio. Put differently, as we grow, there will be systematic improvement to leverage and profitability. By 2,030, we expect that the consolidated net debt to last 12 months EBITDA will be around 5.5x or lower, and overall return on capital employed will be double digits.

Speaker 3

On Page 38, we delve into leverage. The operational portfolio of assets that have been operating 1 year or more had a net debt to last 12 month EBITDA leverage ratio of around 5.5 times, while the same ratio on a consolidated basis stood at 8.2 times. We want to point out that this higher figure includes debt related to manufacturing, equity contributions by our JV partners in the form of compulsory convertible debt and debt related to our under construction portfolio. After these adjustments, our underlying core leverage ratio is about 5.5 times. Sorry, on Page 39, let me follow-up on Sumant's discussion of funding our growth.

Speaker 3

Our internal cash flow to equity generation can fund about 2 gigawatt per annum of capacity additions. Adding this up through FY2029, we can reach about 17 gigawatt without additional equity. However, the auction market is particularly robust right now, offering some of the highest returns we have ever seen. In addition, given the shortages of development capability combined with strong ESG mandate by global service Turning to Page 40, we address our funding requirements and sources. We need approximately US8 billion dollars in CapEx to build out 21.4 gigawatt committed portfolio and pipeline.

Speaker 3

We plan to fund our equity needs through a mix of asset sales, cash on balance sheet and internal cash generation. And for debt requirements, we have multiple options available, including the MoUs that we've signed with PFC, REC, Asian Development Bank and Society General. Now let's turn to our financial performance. On Slide 41, we reported our 1st profitable year since existing, a significant milestone showcasing our platform's inherent cash generating capability. The number of megawatts we brought online was in the middle of the initial FY 2024 guidance, while EBITDA came in at the top range top of the range.

Speaker 3

And the cash flow to equity was slightly higher than the top end of the guidance provided even after excluding the $3,700,000,000 gain on asset sales. On Page 42, our contracted portfolio now stands at 15.6 gigawatt, with 2.2 gigawatt of contracts just recently signed. We have an operational capacity of 9.5 gigawatt, having added 1.9 gigawatt during the year. Note that we sold around 200 megawatts during FY 2024, which are no longer included in our portfolio. Of the 1.9 gigawatt added, 11.74 megawatt is solar and 7 68 megawatt is wind.

Speaker 3

We saw significant improvement in wind PLS, reaching 26.4% compared to 25.5% last year. Solar PLS was slightly lower, mainly due to cyclones on the West Coast of India early last year. Overall, there was about a $3,000,000,000 negative impact of weather in 2024 versus our long term 20 year averages. On Page 23, we showcase our cash generation. While not a GAAP metric, cash profits demonstrate renewed strong cash generation for equity invested.

Speaker 3

During FY 2024, we reported a cash profit of INR 26,000,000,000 This marked an 83% increase from the previous year. On Page 44, we emphasize our strategy to fund growth through capital recycling. We have raised about $645,000,000 by selling close to 20% of our assets at an approximate 2x price to book. This equates to almost 9x to 9.5x EV2 run rate EBITDA. This strategy allows us to build assets at lower EBITDA multiples of around 7x to 7.5x and sell them at higher multiples, thereby realizing equity gains for faster growth.

Speaker 3

This equity is reinvested into projects, providing even higher EBITDA on our invested capital by 1.5x to 2x approximately. Capital recycling also improves returns meaningfully Based on our track record of selling about 20% of the company at around 9x to 9.5x EV200 EBITDA, the range of expected IRRs improved by 20% to 25% versus our base case. We will continue to maximize the opportunity to recycle assets and use this lower cost of equity for growth, and we will be disciplined in ensuring that we only access the cheapest source of capital without over leveraging our balance sheet. On Page 45, our days to sales out debt of sales outstanding has improved substantially and now stands at around 77 days of receivables on billed revenue, a 61 day improvement year on year. We are making good progress on overdue receivables with the states and expect the DSO stability once these issues are resolved.

Speaker 3

The Government of India has taken initiatives to streamline recovery through its national power portrait, tracking audio states audio days from states. This payment security mechanism has improved our working capital over the period. With that, let me hand it over to Vaishali for comments on ESG.

Speaker 4

Thank you, Kailash. Turning to Page 47. As we reflect on the remarkable milestones achieved during fiscal year 2024, our journey has been marked by achieving our targets and being recognized by top rated ESG rating platform, affirming our leadership globally. We set new benchmarks in our ESG vision, performance and transparency, which I will elaborate in the upcoming slides. Renew has been recognized by top ESG rating platforms, including being named among the top rated ESG Companies by Sustainalytics and the Best in India's Electric Utilities and ITP's corporate in India by Refinitiv.

Speaker 4

Our dedication to sustainability is further demonstrated by the increase in our S and P Global score, which has gone up to 55 in fiscal year 2020 3 from 41 in fiscal year 2022. We have maintained our B score in CDP climate change and A- in CDP supply engagement rating. Last year, renew received global recognition for its pioneering achievements in business excellence, digital innovation and sustainability. Among the most notable accolades were the MIT Technology Review 2023's 15 climate tech companies to watch for was revenue was included in this, and it was one of the only 2 renewable energy companies globally to be included in this prestigious list. In the sustainable market initiative, terracotta seal, we were one of the 17 companies in a global list, which was recognized for its efforts towards conservation of water and its operations.

Speaker 4

The COP28 Presidency Energy Transition Changemaker was an award which was given to us by the COP28 Presidency. Clean energy company from India to be recognized under the category of Renewables Integration and Clean Power and renewables as well. The World Economic Forum's Global Lighthouse Network, we won this for the 2nd time, and we found our place in a select list of 21 members of the Global Lighthouse Network, a community of manufacturers that show leadership in 4th Industrial Revolution Technologies. These accolades underscore our commitment to settling to setting new benchmarks in ESG vision performance and transparency. Since inception, our social responsibility has been central to our business strategy at Renewal.

Speaker 4

Our CSR journey, which began in 2014 and since then our impact footprint has grown to about 500 plus villages across 10 plus states in India, impacting lives of over 1,000,000 people. Last year, we were awarded a very prestigious CII ITC Sustainability Award in the CSR category, recognizing our robust processes and consistent impact across our operations around India. Turning to Page 48, I would now like to switch to specifics of some of our efforts for fiscal year 2024. Some of the flagship programs that we've been doing work are: 1 is Lighting Life, which is an initiative focusing on last mile electrification of government schools with less than 3 hours of electricity and putting renewable energy sources for electricity in these schools and advocating for climate action. We have electrified 63 schools and established 66 digital learning centers across 5 states.

Speaker 4

Women for Climate is a very important initiative where we're addressing the gap of women's participation in the energy sector, reskilling and entrepreneurship development for rural and urban women. We have trained over 300 salt sand farmers as solar technicians and helped them secure jobs for more than 30% of the trainees. With respect to our site, Renewal does a lot of work actively and a lot of the programs employee driven as well. In addition to developing social infrastructure for the communities, our employee engagement initiatives foster a culture of giving and care within the renewed network of sites. We have provided safe drinking water by building 170 water tanks, desilting 18 lakes and installing over 100 reverse or small scale units across communities and schools.

Speaker 4

At Renew, sustainability is really about advancing our communities year on year and taking the disclosures to the next level. With that in mind, the release of our first integrated support of the plan and assurance of our EFC data is underway. Let me hand it back to Sumant to talk about our guidance now.

Speaker 2

Thank you, Vashali. Turning to our annual guidance on Page 50. For FY 2025, we expect an adjusted EBITDA of INR 76,000,000,000 2,000,000,000 and expect to complete 1.9 gigawatts to 2.4 gigawatts of projects this year. The addition of these projects will enable us to deliver CFE of INR 12,000,000,000 to 14,000,000,000 in FY 2025. In addition, we expect that our current contracted pipeline will deliver INR 110,000,000,000 to INR 115,000,000,000 dollars on a run rate consolidated basis and CFE of INR 30,000,000,000 to 32,000,000,000 dollars On a longer term basis, we expect that we should be able to deliver the full 21.4 gigawatt portfolio plus pipeline by the year 2029, FY 2029 and reach the run rate guidance by FY 30.

Speaker 2

On a fully constructed run rate basis, after considering planned asset recycling, we should be able to deliver EBITDA of INR 142,000,000,000 to $150,000,000,000 and a CFE of INR 35,000,000,000 to $42,000,000,000 Thank you so much for all your patience and giving us time to go through this presentation. We will be now happy to take any questions from you. Thank you.

Operator

Your first question comes from Justin Clare with ROTH Capital Partners.

Speaker 5

Yes. Hi. Thanks for taking our questions here. So first off, you have 21.4 gigawatts that you've won at auction already. And so just thinking through the interconnection constraints here, how are you thinking about participating in new auctions in FY 2025 and beyond given the size of the pipeline that you already have, are you looking to participate?

Speaker 5

And then if so, are you looking at winning projects where the COD dates would be in FY 30 or potentially beyond? So how are you thinking about that part of the business?

Speaker 2

Yes. So I think, Justin, as far as your question on interconnect is concerned, to build for a new project, you need obviously both the interconnect and also the reasonable visibility on how you're going to pick up the land or the ability to block the land. So basis that and then the PLF wind, wind PLF or the aviation, we make an assessment of where can you bid from with a high degree of certainty that you'll eventually be able to do the project there. Now the better and you can block interconnect through a couple of different mechanisms. You can acquire land ahead of time and that allows you to block interconnect or you can give a bank guarantee and block interconnect.

Speaker 2

But if you do the second, then you have to get the land within a few months after that. Otherwise, you can lose your degree as well. So based on this, what we are looking at doing is constantly looking forward and blocking interconnected areas where we know which are good sites. And the better sites you can get, the more competitive you are in auction, simply because if you have got better locations than other people have, then obviously you are able to make higher returns at the same tariff compared to other people. So therefore, the project development becomes very crucial in actually maximizing on the return of the projects that we are bidding for.

Speaker 2

And so at any given point in time, we are extending out this whole project development by anything from 4 to 6 gigawatts beyond what we already have in terms of pipeline of projects, which is in this case 21.5 gigawatts. So we have therefore many other sites and interconnect areas that we have that we already are holding right now and through which we will now bid for new projects. Now to your question of, are these projects going to be beyond 2,030? That is something that we will assess as we go forward because obviously we want to make sure that we stay within much availability that we have. And therefore, we will bid for projects on a very, very select basis from this point on.

Speaker 2

And to the extent that we can make those projects back ended, we are in this time period, we would like to do that, so that we are able to manage the capital requirement aspects. And we will continue to bid, but as I said, on a very select basis for projects that we can get even higher IRRs. So that is the review that we are thinking about it right now.

Speaker 5

Got it. Okay. That's really helpful. And then maybe just one on your guidance here. You expect to complete 1.9 to 2.4 gigawatts by the end of fiscal 2025.

Speaker 5

I was wondering how much of that capacity is expected to be commissioned versus how much will be operational but not yet commissioned. So it does look like there's a gap between when you operationalize a project and when it actually gets commissioned, how much is that gap? And then considering that, I was wondering how significant are merchant project sales in your fiscal 2025 guidance?

Speaker 2

Okay. So the reason that there was a gap this last year between projects that have started generating revenues and projects that were technically deemed to be commissioned is because of 2 reasons. 1, the grid operator introduced new guidelines and rules that required a much higher stringency of the connect that we had into the grid. In terms of they wanted us to do various trials on and grid matching and all of those kinds of things, which actually on a one time basis in a way delayed all commissioning of projects, while they went through this new set of rules and regulations. Now that that is well known and well understood, it is something that the whole system, not just us, but also the system operator, are now able to sort of buckle down and start minimizing the timeline between revenue they're waiting as well as the commissioning, okay.

Speaker 2

So as we go forward, that gap will keep narrowing. Last year, as I said, the gap was a little larger because of the fact that all these rules are new. This year, we're already able to start working a little bit more efficiency on these issues and start factoring it in. So I can't tell you exactly where we will be by the end of this year, but the gap will be a lot narrower, okay. But to be honest with you, it matters less to us because once the project starts generating revenue, that's really the important thing from our standpoint.

Speaker 2

The second thing is that the moment the project is deemed technically commissioned, we then have to start selling it under the PPA to the end discount. Whereas when it is still generating revenue, but not yet commissioned, that power we can start selling into the merchant market. And so as you know, it's really worked out well for us because there has been the merchant prices have been higher than sometimes the PCA prices have been. But that gap is, as I said, is narrowing now. So there isn't going to be a big gap going forward.

Speaker 2

To answer your question separately on merchant sales, I think merchant sales in our portfolio will represent maybe about 10% to 15% of our total portfolio in general. I don't think that number will be more than that. And that will be a function of some of these projects that are being sold into the merchant market on an interim basis by waiting to get commission or there are certain other projects, especially for the complex projects, where there are several components that are required to be commissioned before the project can be used to be commissioned. In which case, if you commission the individual, let's say, a wind farm or 2 or solar farm, then those projects, sometimes they're being commissioned, can also send it to the merchant market. And so that's the second nature of our services in the merchant market.

Speaker 2

The third will be overflow of power from some of the RPC projects that we will be executing in the future. And the 4th will be pure merchant projects that may be doing merchant sales for a year or 2 before we put it into a PPO. But the aggregate of all of that is unlikely to exceed 10% to 15% of that building successfully.

Speaker 5

Okay, got it. Very helpful. Thank you.

Speaker 2

Thank you, Dave.

Operator

Your next question comes from Puneet Goliath with HSBC.

Speaker 2

Yes. Thank you so much. My first question is on

Speaker 6

the additional projects that you've won. How soon do you think you'll be able to sign DPA? And if you can give some color of out of the 52 gigawatt that government auctioned out, how much has already signed CPA?

Speaker 2

Yes. So after 8 gigawatts that we had won last year, as I think I said in my remarks about 1.5 gigawatts worth of 1.7 gigawatts or 1.8 gigawatts of details have been signed. And therefore, the balance 6 gigawatts or thereabout is still left to be signed. Now there was some slowdown in PPA signing because the pool of conduct was in effect, as you know, for the last couple of months. And so some of the government agencies were going a little slow on signing PPA, waiting for the code of conduct to be finished.

Speaker 2

Now that has got finished, I expect that some more PPUs will get signed. But I think this process will take a little bit of time. Puneet, it may take, as I said, 6 to 9 months to get some of these to get mostly all of the PPA signed, simply because some of them are complex projects and therefore there needs to be a higher degree of engagement between the VSCOMs and the bidding agencies to expand to the VSCOMs and so on. And there has also been a complicated as you know, the DISCOMs have to get approval from their regulatory agencies as well. So that whole process is a little bit longer, especially for the more complex side.

Speaker 2

So that's why my sense is that over the course of this fiscal year, the remainder of this fiscal year, most of the PPA will get signed.

Speaker 6

Okay. That's okay. And on your cell and module manufacturing, you seem to have 6.2 gigawatt of module manufacturing, but your own plans indicate roughly 2 gigawatt of annual installation.

Speaker 2

So how should we think about

Speaker 6

the balanced capacity? Would you be willing to sell it out in the market, export it or within India? Any thoughts

Speaker 2

there? Yes. So with 6 odd gigawatts of capacity, we'll essentially be producing about 4.7, 4 100 gigawatts of actual modules, which will be and for our own 2 gigawatts, we need given the over sizing about 2 point 7, 2.8 gigawatts. So the balance we do intend to sell into the market. Now there are 2 ways in which we're going to sell that.

Speaker 2

Number 1 is as pure module, maybe on a tolling basis or whatever. And the second is along with the sales that we are going to commission very soon. Now in the sales, as you know, there are 2 different markets that we can sell into. 1 is the DCR market domestically, which includes the rooftop scheme, the student health scheme. And the second is, of course, the export market as well, whereas in the U.

Speaker 2

S. Particularly, we are now putting new import curves on Chinese and Southeast Asian sales. So that is likely to become an attractive market for Indian sales. We can, of course, also sell the cells along with the modules in the domestic market. That is also, of course, a possibility.

Speaker 2

So I guess we would be selling about 1 to 2 megawatts a year of modules and or cells potentially separately or together depending on where we get the best realization. And that number may decrease as we ramp up our own solar execution capacity.

Speaker 6

Understood. And how is your experience doing in terms of operating costs for the module manufacturing so far?

Speaker 2

So far, it's been very good. Of course, we have started module manufacturing for the first time. There and a lot of people have started off at the same time. And so there is a shortage of the right kinds of skilled workers. So therefore, I think ramp up times have been a little bit longer.

Speaker 2

But I would say by and large overall within our budget. And I think that everything is now getting to a good level of stabilization in terms of cost of production and quality as well.

Speaker 6

Lastly, if you can talk about how much higher IRRs do you think you'll make on hybrid over solar once again?

Speaker 2

On complex projects versus solar you think?

Speaker 6

Yes, complex projects.

Speaker 2

So the thing is, 1st of all, complex projects have a higher component of wind and wind is much harder to execute for most people. And therefore, we just have fewer bidders. And because we have fewer bidders, therefore, the relative competitive intensity is a lot lower. And therefore, you end up usually stopping at tariffs, which are commensurate with the least efficient bidder, right? And therefore, us being in most cases the most efficient bidder end up making those extra margins on the extra tariffs once the bidding starts.

Speaker 6

So in terms of IRR?

Speaker 2

Well, as a polar tends to have a spread. Yes.

Speaker 6

Yes. So how much higher IRRIS should one be cost? You used to take 16% to 20% for your vanilla solar project. What should be Yes.

Speaker 2

So I think I'll give you ranges because obviously they tend to move a little bit depending on the bid and so on. But solar typically would be, I would say, 17% to 18% in terms of equity IRR. Complex projects are probably about 90% to 20%.

Speaker 6

Okay. So just 200 bps higher?

Speaker 2

Yes. So yes, yes, yes. That's right. Okay. And there is also that we are harder to execute as well and that is why you get that return.

Operator

Your next question comes from Amit Mandeloy with Mizuho.

Speaker 6

Hey, hello everyone. Thanks for taking the questions. Thanks for the presentation. There's definitely a lot of information here. So we'll probably take some time to unpack that.

Speaker 6

But maybe high level, I think there's some conservatism baked into the long term guidance here, just looking at, like, for example, the 9 times EBITDA assumption on asset recycling that seems lower than the previous sale last year and just where some of these peers or companies are trading in India, right? So overall, I'm just trying to understand like what buffer do you have on the top end or the bottom end on the guidance here going forward?

Speaker 2

Kailash, do you want to take that?

Speaker 3

Yes, sure. Maheep, so obviously, these are market dependent transactions and that's why we are working with a range. We will obviously target the top end of what we are sort of guiding towards, but we just need to be a little bit conservative.

Speaker 6

Got it. And I appreciate that. I mean, maybe in terms of just like the solar module supplier question on selling those internationally, is any of that 1.5 to 2 gigawatts per year right now in the guidance? Or is that an upside to the guidance here

Speaker 2

for the sales to the international markets? Sorry, I couldn't answer again. Can you answer?

Speaker 3

No, I couldn't either. Can you say it again? Maheep?

Speaker 6

Yes, sure. So I talked about 1.5 to 2 gigawatts of solar module sales to international markets beyond what your internal consumption is? Just curious if that is in the guidance or that would be upside to the EBITDA guidance?

Speaker 1

So that, Maheep, I can take that one.

Speaker 3

So, Maheep, that's yes, that's not part of the guidance at this point in time.

Speaker 6

Got it. And then maybe just the last one and I'll catch up later on with you guys. But on the elections, any thoughts on how the new I mean, obviously, we're pretty fresh here, but any early thoughts on how that changes, any dynamics on the demand growth or supply or anything else from your point of view?

Speaker 2

No, Maheep. I don't think that we expect any change to happen. This government has always been very supportive. And a lot of that comes directly from the Prime Minister as we have more. But the government overall has also very strong commercial business.

Speaker 2

1, of course, as we talked about power demand is growing, renewables is the cheapest, cleanest way to meet that power demand. So there is a very strong economic information reason for the whole renewable energy effort to carry on. But even beyond that, I don't really expect anything to change, because some of the alliance partners are also very strongly supportive of renewables and have been in the past when they were earlier in state governments. So I would expect that the same exact policy will continue and there will be a lot of continuity in policy looking in the coming few years.

Speaker 6

Thanks for the questions.

Operator

Your next question comes from Angie Storozynski with Seaport. Angie, your line is open. Angie Storozynski from Seaport. Please go ahead.

Speaker 7

Yes, I'm here. I'm so sorry about it. So my first question, so I noticed that the complex projects are now built and they came online and I know that they're not commissioned yet and not dispatching under the PPAs. But I'm just wondering if for the last couple of months that they're operational, are you seeing that the dispatch or the output from these assets is in line with your expectations? Again, I understand that they're now merchants, but again, is there any sort of confirmation of your theoretical models of how these assets might be working under the PPAs?

Speaker 2

Yes. So Angie, what is commissioned right now is just the plain vanilla wind project. So it's very hard to extrapolate from there about how the whole thing would work once it comes together. It's just like this is a wind project just like any other. And right now, whatever it's producing, they're selling into the exchange.

Speaker 2

So it's very hard to be able to forecast from there. I think it's only once the solar project comes on stream and the batteries come on stream that we'll actually be able to then combine the whole thing and start getting a better sense. But for the last 1 year, we have been doing that in our digital trade. So we have been able to replicate the performance of the plant as of it were running over the course of the last year. And therefore, we've been able to fine tune the design and so on basis that.

Speaker 2

So I would say that even once the whole plant comes on, there would not be very significant, if at all, any deviation from what we've anticipated because of this digital capability that we've been developing.

Speaker 7

And my other question is for your existing wind assets. Are you seeing any issues with performance, especially of those older assets? Any changes, for example, in the PLFs, not because of weather patterns, but because of aging of these assets? And I mean, obviously, we're seeing a lot of repowering of wind assets here in the U. S.

Speaker 7

And I'm just wondering if the same could be true for your assets and more importantly, if there is any deterioration or aging of these assets reflected in basically lower output?

Speaker 2

No, Andy, so far we have not seen any meaningful data from the earlier from the design curve. Keep in mind our assets are wind assets are only about 12, 13 years old right now. So the oldest assets that we have. So it's not we have not seen any wide dispersion yet. But even if we were to replace them with newer turbines, it would not really be cost effective to do that.

Speaker 2

And the PPA terms very often require us to continue with the same wind turbines that are installed. So I don't think that repowering here is going to be a possibility, at least until the time the PPA is outstanding. Maybe subsequent to that, we could use the same interconnect that we have, the same land that we have, and so on to then put up new wind turbines and connect those to the grid. And then depending on whether the merchant market makes sense or some other PPA market makes sense, we can then look at them. But we are still about at least a decade away from there.

Speaker 7

And then the last one, when you show us projections of EBITDA and net debt or leverage, those are reflective of asset sell downs. And so basically, it's your share of EBITDA and your share of net debt after accounting for minority interest. Is that right?

Speaker 2

Kailash?

Speaker 3

So as of now, we are reporting the gross numbers for both the debt and the EBITDA.

Speaker 7

But when you show projections like 15 to 16 gigs of assets and then you show me the range of that EBITDA, would that reflect already assets divestitures to finance this incremental EBITDA stream?

Speaker 3

So only the assets which are sold 100%, those get taken out fully from both debt, EBITDA and profits. So the rest of the assets are consolidated on a gross basis and then there's a minority interest takeout at the bottom.

Speaker 7

Of the net income level. Okay. Thank you. Thanks.

Operator

Your next question comes from Nikhil Nagania with Bernstein.

Speaker 3

Thank you for taking my question. I just had one question. There are 2 big events happening on the transmission front. 1 happened last year with implementation of G and A and second coming next year with possibly free transmission going away, interstate transmission going away for renewables. I wanted to understand what implication is it having on your strategy and B, even in the industry, do you see a change in behavior due to these two events?

Speaker 2

Yes. So, Nikhil, so far we haven't seen a significant change in behavior, but especially the second event is likely to have an impact because if in fact, let's say, if I win a project today that is going to be commissioned 3, 4 years from now after the full transmission charge has been into levied. And therefore, as a buyer of that power, I have to pay, let's say, a rupee, rupee 50 for the transmission charge. Then I have to add that to the pure generation charge or the bidding tariff. Now in a number of cases, that number may end up being more than if I were to produce that power in my own state.

Speaker 2

And therefore, there'll be different views that different states will emerge with. One set of states will say, you know what, it makes no sense for me to buy from some other state, I'll do it within my own state, right? And the 2nd set of states, even despite the transmission charge, will still not be competitive or the land cost may be too high or there may be some other cost dynamics that don't compensate them. So for them, the cost will just go up of purchasing renewable energy and there's nothing that can be done about that. But as a result of this, in some of the states which have reasonably good renewable energy resource, but which is not the best, there may be the development of an STU based market or an intrastate connectivity based approach.

Speaker 2

Now some of those states like Gujarat, for example, bid. But there may be others that may not have a good enough credit quality. And therefore, they may have to get the bidding agencies to do state specific bids where the bids are set up for the STU within those state governments. And we've seen deals like that in the past when Rajasthan, for example, had done a second big deal in Rajasthan for the local market. So we could have that kind of thing.

Speaker 2

So what will happen is that there will be a shift in some of the non in some of the RE rich states where they start doing procurement from within their own state. And therefore, we are now looking at how we need to shift our own connectivity strategy to make sure that we block reasonable amount of good sites in state government, even though on an absolute basis, they may be more expensive than putting a project, let's say, in Rajasthan, in the case of solar. But with the transmission charges, it may not be viable. So those are the kinds of things that we are now working on to figure out exactly how this whole dynamic is going to change the spread of renewable energy projects across the country and basically working to flex our development strategy along with that.

Speaker 3

Makes sense. That's very helpful. Just one related question. Once the charges are implemented, I think now the concept of over sizing the asset to supply RTC power or dispatchable power, would that imply that the transmission charges would be as per the oversized capacity or as per the contracted capacity for the buyer?

Speaker 2

They would be as per their contracted capacity because that's really what you're going to be using. And so the issue is going to be actually that co located projects may actually make more sense rather than distributed projects. So right now, as you know, we are putting up wind separately and solar separately, right, because transmission charges are free. But once you start getting charged for the transmission, then it may make sense to use the transmission line more efficiently to bring down the transmission charges. And that may be the more effective, the more cheaper way of doing it than to be putting it up in the better DDI.

Speaker 2

And so that's the second way in which we are now relooking at our project development strategies, which is how do we get places which have both have good both wind and solar, so that we can think about co locating and therefore bringing on the transmission charge.

Speaker 6

Makes sense. Very helpful. Thank you so

Speaker 2

much for answering my questions.

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