管理層發言
Thank you for joining us for ReNew Energy Global Plc's fourth quarter fiscal year 2024 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 will now turn the conference over to Mr. Nathan Judge. Please proceed.
Yes, 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 fourth quarter and full-year 2024 ended March 31, 2024 last night and a copy of this press release and earnings presentation are available on the investor relations section on Renew's website at www.renew.com. With me today are Sumant Sinha, Founder, Chairman, and CEO; Kailash Vaswani, our CFO, and Vaishali Nigam Sinha, Co-Founder and Chairperson of Sustainability.
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 furnish in our Form 6-K and the presentation on our website for a more complete description. 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.
Thank you, Nathan. Good morning, good afternoon, and good evening, everyone. I'm pleased to have you all on our earnings call. In the presentation, I want to highlight that we remain committed to our goal of creating a carbon-free world, one step at a time. Our focus is on growth that benefits all our stakeholders, particularly our shareholders. As a leader in renewable energy in India and the Global South, we plan to strengthen our position in the coming years. We prioritize growth only where the returns justify the investment, rather than seeking scale for its own sake. The fiscal year 2024 kicked off with a significant announcement from the Ministry of New and Renewable Energy, which set a target of 50 gigawatts of annual auctions—almost three times what had been auctioned in previous years. Not only did India aim for this target, but it exceeded it, auctioning over 62 gigawatts of renewable energy capacity during the year.
Since April 2023, we have secured around 8 gigawatts of new capacity, which is approximately 60% more than our portfolio on March 31, 2023. We have signed Power Purchase Agreements for about 2.2 gigawatts of capacity so far in FY’25, bringing our total contracted portfolio to 15.6 gigawatts. We expect to finalize agreements for the remaining 6 gigawatts, for which we have letters of award, within the next six to nine months. We are on track to provide more than 21 gigawatts by 2029, significantly more than we had at the end of fiscal year 2024. The macroeconomic environment is very promising, with expectations for consistent policymaking and a strong push towards renewable energy. On the demand side, we foresee robust growth in sectors like electric vehicles and data centers, which will not only boost GDP but also substantially increase power demand. Currently, solar cell and module prices are at historic lows, while battery prices have dropped by about a quarter in just over a year, enhancing project returns.
The upcoming fiscal year is expected to present even more opportunities than the previous one. On page seven of the presentation, we address key aspects that we believe the market has not yet recognized. From our perspective, we have a clear path to achieve 16% to 18% annual growth through the end of the decade, primarily driven by internal cash flow generation and asset recycling, and we do not plan to issue new shares. We expect to improve our leverage ratios during this time. Our contracted portfolio stands at 15.6 gigawatts, and we have another close to 6 gigawatts in a favorable bidding environment, for which we anticipate signing Power Purchase Agreements soon. With over 21 gigawatts, we have a clearer growth strategy and increased confidence in execution and returns. Importantly, the next 10 gigawatts of growth promise significantly higher returns compared to the 9.5 gigawatts in operation as of March 31.
Asset recycling is central to our strategy, providing a lower equity cost for funding growth and enhancing returns with notable premiums over build costs. We can increase our internal rate of return range to 20% to 25% post-reinvestment of equity and sale gains, with plans to monetize around 2 gigawatts of assets by FY ’29. We also recognize some confusion regarding our financials. In the near term, we will incur substantial investments and costs, such as debt and unallocated overheads for our platform. However, these expenditures create significant comparative advantages and are crucial for long-term value creation. For our operations that have been active for over a year, we see a return on capital employed of about 11%, compared to 8% at the consolidated level. These operations contribute about INR17 billion as cash flow to equity, versus INR13.7 billion for our FY '24 consolidated cash flow to equity.
Moreover, they maintain a net debt to LTM EBITDA ratio of 5.3 times, compared to 8.2 times at the consolidated level. As we continue to grow this decade and operational assets increase, our consolidated account ratio will improve significantly. On page eight, we reflect on our performance since our listing three years ago, achieving approximately 18% to 19% annual growth in both operating megawatts and adjusted EBITDA. With ongoing projects, recently signed contracts, and anticipated wins this fiscal year, we believe we can deliver 16% to 18% growth in adjusted EBITDA for the remainder of this decade. While investing in technology and building a capable platform, our EBITDA growth is outpacing our operating megawatts growth, suggesting margin improvement despite ongoing investments. We anticipate our current pipeline of around 6 gigawatts of uncontracted auction wins will contribute approximately INR142 billion to INR150 billion in EBITDA by decade's end, doubling our FY ’24 figures and representing close to 3.5 times growth since our IPO.
On page nine, we reiterate our commitment to generating shareholder value, pursuing low-cost capital to fund expansion. We can self-finance about 1.5 to 2 gigawatts of assets with our cash flow without needing outside equity or capital recycling. This implies we can achieve around 17 to 18 gigawatts of operational capacity by FY ’29 without additional equity. Our distinct development expertise commands a premium, reflected in our bidding market returns exceeding recent historical figures, as well as premium offers for our assets. As such, we plan to accelerate growth by adding an additional 500 megawatts to 1 gigawatt each year through asset recycling. This strategy is likely to greatly enhance our cash flow to equity and support higher growth as we increase capacity. Through recycling, we aim to build over 19 gigawatts by selling 1.5 to 2 gigawatts of assets at twice their book value, potentially achieving a multiple of around 9.5 times EV to run-rate EBITDA.
We emphasize that our strategy to fund growth via capital recycling is essential, as it offers a more competitive equity cost than issuing shares and meaningfully enhances expected internal rates of return post-reinvestment. On page 10, we demonstrate that our projects are ultimately profitable once stabilized and fully operational. Kailash will provide further details shortly, but I want to share significant highlights. Starting this fiscal year, we had 7.6 gigawatts of operational assets, excluding the 400 megawatts sold during the year, which generated an adjusted EBITDA of approximately INR63 billion in FY ’24. The net debt to LTM EBITDA ratio for these projects was about 5.4 times, and their return on invested capital was around 11%, delivering a stable cash flow to equity of about INR17 billion. Moving to page 11, our growth projections show that we aim to increase our EBITDA annually by 16% to 18% over the next five years, targeting a run rate adjusted EBITDA of around INR142 billion to INR150 billion by FY ’30.
Once operational, our 19.4 gigawatts of assets should yield about INR35 billion to INR42 billion in cash flow to equity, reflecting an annual growth rate exceeding 25%. We anticipate a return on capital employed between 11% to 12% for the consolidated results and will focus on improving our overall leverage levels while aiming to decrease the consolidated net debt to EBITDA ratio by about 25% from current levels. For FY ’25, we expect EBITDA of INR76 billion to INR82 billion and to bring 1,900 to 2,400 megawatts of new projects online. Furthermore, we project a cash flow to equity of INR12 billion to INR14 billion, marking about 30% growth when adjusted for the gains recognized in FY ’24. On page 12, we reaffirm our dedication to pursuing only the highest return opportunities that exceed our capital cost. The return on capital employed for projects commissioned in FY ’23 currently stands at around 11%, surpassing our weighted average cost of capital of around 8.75% to 9.25%.
Our in-house capabilities in wind EPC and O&M, coupled with digital technologies, allow us to engage in firm power or complex projects with the highest returns, representing the fastest-growing market segment. We have partnered with both prominent domestic and international investors interested in our assets and have secured equity for growth. This approach enables us to achieve higher returns on invested capital while minimizing our overall leverage. Now, on page 14, I am pleased to report our highlights for the quarter and full year 2024. We recorded our first profitable year since listing, marking a significant milestone that demonstrates our inherent cash generation ability. Our EBITDA reached the top of our guided range and exceeded our cash flow to equity target. We added 1.9 gigawatts of operational capacity as projected and reported an adjusted EBITDA of INR65.6 billion, which is in line with our initial expectations.
Furthermore, we surpassed our cash flow to equity guidance by reporting INR13.7 billion, including a gain of INR3.7 billion from asset sales. Notably, we achieved a profit of INR4.1 billion or $0.12 per share for our first profitable fiscal year since going public, with our contracted portfolio swelling to an impressive 15.6 gigawatts, including 2.2 gigawatts of newly signed agreements. Now, on page 16, we summarize updates from our businesses. The current renewable energy landscape is exceptionally favorable, highlighted by over 62 gigawatts of options in FY ’24 and over 50 gigawatts already in the pipeline for FY ’25. High power demand has driven up merchant prices, leading to higher auction tariffs as well. Electricity demand is at unprecedented levels. Additionally, our differentiated platform positions us as a leader in firm power and complex projects, utilizing our capability to integrate wind development with digital tools.
The market remains limited in terms of participants capable of executing firm power or complex projects, resulting in higher return opportunities. Our expertise is complemented by decreasing solar module and cell prices, along with notable reductions in battery costs. On page 18, I would like to focus on the auction market. This has been one of the best auction environments we have witnessed since our inception, with RE auctions more than quadrupling in FY ’24 compared to FY ’23. Another 50 gigawatts has already been announced for completion in the current fiscal year. We have observed a significant growth in firm power projects, with over 23 gigawatts auctioned in FY ’24. While the overall market has expanded, we find that subscription rates indicate low competition, especially in firm power or complex project options. Although traditional wind and solar projects attract sufficient interest, some complex projects have seen less than full subscription.
We expect this trend to persist due to limited capital, project size under development, and the constraints faced by our peers, which may lead to lower competition and better returns for us. On page 19, India's GDP for FY ’24 grew by 8.2% year-on-year, exceeding expectations. This economic growth, coupled with the enhanced purchasing power of Indian consumers, is contributing to a consistent rise in power demand, which has averaged an 8% increase over the past four years. Notably, despite rapid power consumption growth, India still holds one of the lowest per capita electricity consumption rates globally. On page 20, we note that India's peak demand hit new records in May, causing outages and spikes in merchant prices alongside regulatory caps, highlighting the disparity between demand and supply. Despite this surge in demand, supply will take time to align, particularly from renewable sources, which are the fastest and most cost-effective solutions.
This dynamic is likely to lead to continued shortages and an increase in average merchant prices, alongside reduced competition in auctions, suggesting that auction tariffs will likely rise in the medium term. On page 21, due to rising power demand and the obligation to meet its 2030 target of 500 gigawatts of installed renewable energy capacity, the MNRE initiated a 50-gigawatt renewable energy auction target last year. The agencies, along with state distribution companies, exceeded this overall target within the first year by auctioning over 62 gigawatts of renewable energy capacity, nearly a fourfold increase compared to previous years—this is the most significant increase ever. We are closely monitoring an additional 50 gigawatts of auctions announced for FY ’25. Importantly, the growth in firm power or complex capacity has been most pronounced in FY ’24, with around 23 gigawatts auctioned and approximately 9.5 gigawatts already earmarked for FY ’25.
Due to our unique capabilities, we have been able to secure a larger share of these higher return projects compared to our competitors. We took advantage of the expanded auction opportunities by winning around 8 gigawatts of renewable energy capacity in one year, which represents nearly 60% of our contracted capacity at the start of FY ’24. Out of this 8 gigawatts, we have signed Power Purchase Agreements for about 1.8 gigawatts, plus an additional 438 megawatt agreement with a corporate customer. Over 5.2 gigawatts of these 8 gigawatts consist of firm power projects, which are expected to deliver higher returns than standard products. On page 22, while the total addressable market is growing, the capabilities and bandwidth of peers are limited concerning firm power or complex projects. Many competitors outside the top tier have struggled to keep pace with the rapid rise in auctions, leading to lower competition, demonstrated by declining subscription rates.
Vanilla wind, solar, and hybrid auctions have seen oversubscription rates up to 3 times, while some firm power projects have seen less than full subscription. Factors such as capital constraints, scale, and capabilities contribute to this trend. However, our competitive advantage lies in our in-house wind EPC teams. We have been diligently investing in building a robust platform capable of delivering large-scale projects at the lowest cost. Our in-house wind EPC and solar EPC teams, along with land acquisition teams, ensure seamless execution. On page 24, we'll delve deeper into how our unique platform enhances our ability to manage firm power complex projects. Our experience in wind EPC, coupled with our digital capabilities, provides us with a competitive edge, enabling us to offer superior returns compared to standard projects. Our portfolio, along with our pipeline of over 21 gigawatts, includes around 6 gigawatts of firm power projects, which represents about one-third of our total pipeline.
As mentioned, competition within this segment is limited. Our digital lab further improves our returns by optimizing the mix of wind, solar, and battery storage. Therefore, our capability in managing wind EPC projects and our digital framework allows us to achieve remarkable returns in this market segment. We're now participating exclusively in central bids, as the associated counterparty profiles facilitate lower financing costs. Additionally, we only accept corporate Power Purchase Agreements of at least 50 megawatts, focusing on marquee international clients. We strategically invest in the highest return opportunities, with firm power projects currently providing the most attractive options. On page 26, we recognize our position as the largest wind EPC developer in India, with over 4.7 gigawatts of operational wind projects—our closest competitor is only about half our size. Since our inception, India has added approximately 29 gigawatts of wind capacity, with our projects contributing about 4.7 gigawatts—about 17% market share.
Wind projects are inherently complex due to design intricacies, site selection timelines, and right-of-way challenges. Despite these obstacles, wind energy offers the lowest Levelized Cost of Energy for peak demand, even more favorable than solar. In India, peak demand occurs at times when solar generation is low, and our decade of experience with 2,200 wind turbines allows us to optimize bidding models and select the best project sites, giving us a significant competitive edge. Furthermore, we have discovered that managing operational projects independently leads to a cost reduction of 25% to 30% when compared to outsourcing to OEMs, while also resulting in superior uptime and generation from those turbines. Our focus will remain on strengthening our wind capabilities and developing additional power projects. On page 27, we affirm that the combination of wind, solar, and battery storage is the optimal renewable energy solution for firm power, particularly when contrasted with solar plus pumped hydro alternatives.
Wind provides a more economical solution than pumped hydro for meeting peak demand times when solar output is low. Our analysis reveals that the total cost of pumped hydro combined with solar is 10% to 15% higher than what we can produce using wind along with solar and battery storage. Additionally, pumped hydro sites are limited and entail lead times of three to five years, complicating timely delivery in accordance with PPA terms. The decrease in battery prices has made using batteries a much more feasible solution than it previously was, and we anticipate ongoing technological improvements and cost reductions in battery production as well. On page 28, our digital capabilities yield unique advantages. Our digital lab utilizes complex simulations by triangulating proprietary data from our wind turbines and solar inverters to conduct predictive modeling and backward testing, allowing us to effectively bid in auctions and secure better tariffs while reducing execution costs.
With our digital capabilities, we can lessen battery dependence and focus more on wind and solar generation, which are more cost-effective sources of capacity. Our systems enable real-time monitoring of plant performance, optimizing delivery with minimal downtime, and we see our digital tools as a significant competitive edge in a market that increasingly demands complex power solutions. Moreover, ReNew stands out as the only renewable energy company to have received the Global Lighthouse Award from the World Economic Forum, and we have received this honor twice. On page 31, we highlight that access to transmission interconnection is critical for efficient power project delivery. Our initiatives to ensure connectivity for future project growth begin long in advance, leveraging proprietary data and local expertise to identify upcoming substations in regions with the highest Plant Load Factors by reducing transmission line additions.
Most interconnection capacity in India has already been allocated through FY ’28, limiting access for new projects in prime locations. To address this potential bottleneck, we have secured over 10 gigawatts of connectivity beyond our operational projects and have visibility for our projects under construction along with 5.6 gigawatts of uncontracted pipelines. We proactively establish access to interconnection hubs and acquire land where these hubs are likely to develop, ensuring our projects are connected once fully built. This clarity regarding interconnections and site development enhances our competitiveness in bidding, allowing us to secure better sites than our peers. Our in-house project development teams enable us to stay ahead in acquiring land, ensuring efficient transmission and interconnection for our future bids, which empowers us to achieve higher internal rates of return on our projects compared to competitors.
Finally, on page 32, we discuss a critical factor affecting returns—cost. Over the past year, the prices of solar modules and cells, which contribute 40% to 50% of solar project costs, have plummeted by over 50%, generating more than $100 million in CapEx savings in FY ’24. Please note that our capital expenditure forecasts assume higher module prices than the current spot rates, so if we realize current spot prices over the next four to five years, our total solar module capital expenditures could be 30% to 50% lower than projected estimates. Battery prices have also significantly decreased, and we see this downward trend continuing. Turning to page 33, we acknowledge that supply chain challenges, especially in solar, persist in India. The introduction of the Approved List of Modules and Manufacturers has restricted a large portion of solar module imports. To ensure stable supply, we have developed our manufacturing facility to produce modules at lower costs than imported alternatives, even considering import duties, particularly in a limited import context.
Although India has around 35 gigawatts of manufacturing capacity, much of it relies on older, higher-cost technology or is allocated for rooftop and smaller module needs, leaving around 12 gigawatts in actual supply versus much higher domestic demand. We are transitioning to top-con technology, which demonstrates at least 2% to 3% efficiency improvements over current monopole technology, further enhancing our cost advantages compared to Indian peers. Over time, we aim to monetize a portion or even all of our solar manufacturing plants within our capital recycling strategy while ensuring supply continuity for our facilities. When bidding, we factor in buffers over spot prices to mitigate against potential price increases during execution. On page 34, we note that interest costs represent our largest annual expenditure. In the past year, we have successfully reduced the interest rates on refinanced debt by replacing high-cost old debt with cheaper domestic financing.
Both domestic and international lenders show strong interest in our projects. We've signed over $13 billion in debt funding MOUs in the past year with reputable counterparties such as the Asian Development Bank and various Indian financial institutions. Additionally, Indian banks are increasingly willing to finance renewable energy projects, offering competitive terms and larger amounts aligned with the sizeable options and projects we pursue. We have no immediate refinancing risks and are carefully managing our approach to take advantage of a wide range of capital sources. With that, I will hand it over to Kailash to discuss our financing strategy further.
Thanks, Sumant. On page 36, we’ll discuss three themes: profitability, leverage, and funding growth. While 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 long-term. We will show on the slide that leverage on assets in our portfolio that have been operating for at least one 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 2030, we expect that the consolidated net debt to last 12 months EBITDA will be around 5.5 times or lower, and overall return on capital employed will be in the double digits. On page 38, we delve into leverage. The operational portfolio of assets that have been operating for one year or more had a net debt to last 12 months 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. On page 39, let me follow-up on Sumant’s discussion of funding our growth.
Our internal cash flow to equity generation can fund about 2 gigawatts per annum of capacity additions. Adding this up through FY ‘29, we can reach about 17 gigawatts 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 mandates by global investors, we are able to monetize assets at a premium. This asset recycling opportunity allows us to accelerate our growth without issuing new shares. Turning to page 40, we address our funding requirements and sources. We need approximately $8 billion in CapEx to build out the 21.4 gigawatt committed portfolio and pipeline. We plan to fund our equity needs through a mix of asset sales, cash on the balance sheet, and internal cash generation. For our debt requirements, we have multiple options available, including the MOUs that we've signed with PFC, REC, Asian Development Bank, and Societe Generale.
Now let's turn to our financial performance. We reported our first profitable year since listing, which is a significant milestone demonstrating our platform's ability to generate cash. The number of megawatts we brought online was in the middle of our initial FY 2024 guidance, and EBITDA came in at the upper end of the range. Cash flow to equity was slightly above the top end of the guidance, even after accounting for the 3.7 billion gain on asset sales. Our contracted portfolio now stands at 15.6 gigawatts, with 2.2 gigawatts of contracts recently signed. We have an operational capacity of 9.5 gigawatts, having added 1.9 gigawatts during the year. We sold around 400 megawatts during FY 2024, which are no longer part of our portfolio. Of the 1.9 gigawatts added, 1.174 megawatts are solar, and 768 megawatts are wind. We saw a notable improvement in wind PLF, reaching 26.4%, compared to 25.5% last year.
Solar PLF was slightly lower, mainly due to cyclones on the West Coast of India early last year. Overall, there was about a 3 billion negative impact from weather in 2024 compared to our long-term averages. Regarding cash generation, although not a GAAP metric, cash profits highlight ReNew’s strong cash generation for equity invested. During FY 2024, we reported a cash profit of INR26 billion, marking an 83% increase from the previous year. We emphasized our strategy to fund growth through capital recycling, raising about $645 million by selling nearly 20% of our assets at approximately twice the price to book. This translates to around 9 to 9.5 times EV to runway EBITDA. This approach enables us to build assets at lower EBITDA multiples of about 7 to 7.5 times and sell them at higher multiples, thus realizing equity gains for accelerated growth. This equity is reinvested into projects, resulting in even higher EBITDA on our invested capital by about 1.5 to 2 times.
Capital recycling also significantly enhances returns. Our track record of selling about 20% of the company at around 9 to 9.5 times EV to adjusted EBITDA has improved the expected IRRs by 20% to 25% compared to our base case. We will continue to maximize asset recycling opportunities and leverage this lower cost of equity for growth while ensuring we only access the most cost-effective capital without over-leveraging our balance sheet. On page 45, our days 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 to stabilize once these issues are resolved. The Government of India has taken initiatives to streamline recovery through its national power portal, tracking overdue 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.
Thank you, Kailash. Turning to page 47, as we reflect on the remarkable milestones achieved during fiscal year ‘24, our journey has been marked by achieving our targets and being recognized by top rated ESG rating platforms affirming our leadership globally. We set new benchmarks in our ESG vision, performance, and transparency, which I will elaborate on 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 IPPs corporate in India by Refinitiv. Our dedication to sustainability is further demonstrated by the increase in our S&P global score, which has gone up to 55 in fiscal year ‘23 from 41 in fiscal year ‘22. We have maintained our B score in CDP climate change and A minus in CDP supply engagement ratings. 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 which included ReNew, and it was one of the only two renewable energy companies globally to be included in this prestigious list. In the sustainable markets initiative Terra Carta Seal, we were one of the 17 companies on a global list recognized for our efforts toward water conservation in our operation. The COP28 Presidency Energy Transition Changemaker was an award, given to us by the COP28 Presidency. We were the only clean energy company from India to be recognized under the category of renewable integration and clean power, and renewables as well. The World Economic Forum's Global Lighthouse Network awarded us for the second time, placing us in a select list of 21 members of the Global Lighthouse Network, a community of manufacturers that show leadership in fourth industrial revolution technology.
These accolades underscore our commitment to setting new benchmarks in ESG vision, performance, and transparency. Since inception, social responsibility has been central to our business strategy at ReNew. Our CSR journey began in 2014, and since then our impact footprint has grown to about 500 plus villages across 10 plus States in India, impacting the lives of over 1 million people. Last year, we were awarded the very prestigious CII, ITC Sustainability Award in the CSR category, recognizing our robust processes and consistent impact across our operations in 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 working on include 'Lighting Life', which focuses on last-mile electrification of government schools with less than three hours of electricity by putting renewable energy sources in these schools and advocating for climate action.
We have electrified 63 schools and established 66 digital learning centers across five states. 'Women for Climate' is a very important initiative where we address the gap of women's participation in the energy sector, skill building, and entrepreneurship development for rural and urban women. We have trained over 300 saltpan farmers as solar technicians and helped them secure jobs for more than 30% of the trainees. With respect to our site, ReNew does a lot of work actively and much of the programs are employee-driven as well. In addition to developing social infrastructure for communities, our employee engagement initiatives foster a culture of giving and care within the ReNew network of sites. We have provided safe drinking water by building 170 water tanks, desilting 18 lakes, and installing over 100 reverse osmosis units across communities and schools. At ReNew, sustainability is really about advancing our communities year-on-year and escalating disclosures to the next level. With that in mind, the release of our first integrated support facility plan and assurance of our ESG data is underway. Let me hand it back to Sumant to discuss our guidance now.
Thank you, Vaishali. Turning to our annual guidance on page 50, for FY ‘25, we expect an adjusted EBITDA of INR76 billion to INR82 billion 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 CSE of INR12 billion to INR14 billion in FY ‘25. In addition, we expect that our current contracted pipeline will deliver INR110 billion to INR115 billion on a run rate consolidated basis and CSE of INR30 billion to INR32 billion. 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 FY 2029 and reach the run rate guidance by FY 2030. On a fully constructed run rate basis, after considering planned asset recycling, we should be able to deliver EBITDA of INR142 billion to INR150 billion and a CSE of INR35 billion to INR42 billion. Thank you so much for all your patience and giving us time to go through this presentation. We will now be happy to take any questions from you all. Thank you. Nathan, back to you.
分析師問答
Thank you. Your first question comes from Justin Clare with Ross Capital Partners.
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 ‘25 and beyond given the size of the pipeline that you already have? Are you looking to participate? 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?
Yes, regarding your question about interconnect, to bid for a new project, you need both interconnect and reasonable visibility on securing or blocking the land. This involves assessing where you can bid with a high degree of certainty that you'll be able to execute the project. You can block interconnect through different mechanisms; either by acquiring land in advance or providing a bank guarantee, which obligates you to secure the land within a few months. We are actively identifying and securing interconnected areas that are good sites because having better locations makes us more competitive in auctions. This allows us to achieve higher returns at the same tariff than our competitors, making project development essential for maximizing the returns on our bids. Currently, we're expanding our project development by 4 to 6 gigawatts beyond our existing pipeline of 21.4 gigawatts. We already have several sites and interconnect areas in hand for upcoming bids. As for whether these projects will extend beyond 2030, we will evaluate that moving forward, ensuring we meet our technical deadlines. From now on, we'll selectively bid on projects, aiming to structure them to manage capital requirements effectively.
Alright, okay, that's really helpful. And then maybe just one on your guidance here. You expect to complete 1.9 gigawatts to 2.4 gigawatts by the end of fiscal 2025. 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 '25 guidance?
Okay. So you know, the reason that there was a gap this last year between projects that have started generating revenue and projects that were technically deemed to be commissioned is due to two reasons: One, the grid operator introduced new guidelines and rules that required a much higher stringency of the connects that we had into the grid in terms of they wanted us to do various trial runs and grid matching and all of those kinds of things which actually, on a one-time basis in a way delayed all commissions of projects while they went through this new set of rules and regulations. Now 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 work on and start minimizing the timeline between revenue generating as well as commissioning. Okay? 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 important from our standpoint. The second thing is that the moment the project is being technically commissioned, we then have to start selling it under the PPA to the end customer. When it is still generating revenue but not yet commissioned, that power we can start selling into the merchant market. And so it works out well for us because the merchant prices have been higher than sometimes the PPA prices have been. But that gap, as I said, is narrowing now. So there isn't going to be a big gap going forward. To answer questions 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 would 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, while they wait to be commissioned.
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 deemed to be commissioned. In which case, if you commission the individual, let's say a wind farm or solar farm, those projects until they’re deemed commissioned can also sell to the merchant market. The third will be overflow of power from some of the projects that we will be executing in the future, and the fourth may be pure merchant projects that may be doing merchant sales for a year or two before we put them into a PPA. However, the aggregate of all of that is unlikely to exceed 10% to 15% of our building customers.
Okay, got it. Very helpful. Thank you.
Thank you, Justin.
Your next question comes from Puneet Gulati with HSBC.
Yes. Thank you so much. My first question is on the additional projects that you've won. How soon do you think you'll be able to finalize the PPAs? And if you can give some color on out of the 62 gigawatts that the government auctioned out, how much has already been finalized in PPAs?
Yes, so after the 8 gigawatts that we won last year, as I mentioned in my remarks, about 1.5 gigawatts worth or 1.7 gigawatts or 1.8 gigawatts of PPAs have been signed. Therefore, the balance 6 gigawatts or thereabouts is still left to be signed. There was some slowdown in PPA signing because the code of conduct was in effect for the last couple of months, causing some of the government agencies to sign PPAs at a slower pace while waiting for the code of conduct to end. Now that it has ended, I expect that some more PPAs will get signed. This process may take time; I believe it will take, as I said, six to nine months to get mostly all PPAs signed. Some of them are complex projects, requiring a higher degree of engagement between the distribution companies and bidding agencies to explain the complexities to the distribution companies. Some other complexities include needing approval from their regulatory agencies as well. So that whole process takes a bit longer, especially for the more complex projects. So that's why my sense is that over the course of this fiscal year, most of the PPAs will get signed.
And on your cell and module manufacturing, you seem to have 6.2 gigawatts of module manufacturing, but your own plants indicate roughly 2 gigawatts of annual installation. So how should we think about the balance capacity? Would you be willing to sell it out in the market, export it, or sell within India? Any thoughts here?
Yes, so with 6-odd gigawatts of capacity, we will essentially be producing about 4.7 to 4.8 gigawatts of actual modules, which will be needed for our own 2 gigawatts given the oversizing at about 2.7 to 2.8 gigawatts. So the balance we do intend to sell into the market. There are two ways in which we are going to sell that. Number one is as pure modules, maybe on a tooling basis or whatever. The second is along with the cell that we are going to commission very soon. There are two different markets that we can sell into: one is the DCR market domestically, which includes the rooftop scheme, the Suraj 1 scheme. The other is of course the export market as well, where as you know, in the U.S. particularly, they are now putting new import curves on Chinese and Southeast Asian cells. This is likely to become an attractive market for Indian cells. We can of course also sell the cells along with the modules in the domestic market. That is also of course a possibility. I guess we would be selling about 1 gigawatt to 2 gigawatts a year of modules; potentially cells separately or together, depending on where we get the best utilization. This number may decrease as we ramp up our solar execution process.
Understood. And how is your experience going in terms of operating costs for the module manufacturing so far?
So far it's been very good. Of course, we have started module manufacturing for the first time and a lot of people have started up at the same time. There is a shortage of skilled workers, hence ramp-up times have been a little longer, but overall everything is now getting to a good level of stabilization in terms of cost, production, and quality as well.
Lastly, if you can talk about how much higher IRRs do you think we'll make on hybrid over solar once again?
On complex projects versus solar, you think? Yes, so the thing is, first of all, complex projects have a higher confidence level of wind, and wind is much harder to execute for most people. Therefore, we just have fewer bidders, and because there are fewer bidders, the relative competitive intensity is a lot lower. Consequently, you end up usually stopping at tariffs which are commensurate with the least efficient bidder. Therefore, us being in most cases the most efficient bidder, we end up making those extra margins on the extra tariffs once the bidding stops. As for IRRs, vanilla solar tends to have more spread. Yes, yes, yes. That's right.
Okay.
And there is, you know, also the fact that they are harder to execute as well, which is why you get that extra detail.
Okay, understood. That’s helpful. Thank you so much and all the best.
Thank you.
Your next question comes from Maheep Mandloi with Mizuho.
Hey, hello everyone. Thanks for taking the questions. Sumant and team, thanks for the presentation. There's definitely a lot of information there. We'll probably take some time to unpack that. But maybe high-level, I think there's some conservatism baked into the long-term guidance here? Just looking at, 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? So overall, I'm just trying to understand what buffer do you have on the top end or the bottom end on the guidance here, going forward?
Kailash, do you want to take that?
Yes, sure. Maheep, 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 guiding towards, but we just need to be a little bit conservative.
Got it and 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 gigawatt to 2 gigawatt per year right now in the guidance? Is that an upside to the guidance here, for the sales to the international markets?
Sorry, could you say that again?
Sorry, I couldn’t hear the question. Kailash, if you did, can you answer?
No, I couldn't either. Can you say it again, Maheep?
Yes, no, sure. So I talked about 1.5 gigawatts to 2 gigawatts of solar module changes to the international market. What you're asking if that is in the guidance or if that could be upside to the EBITDA guidance?
So, Maheep, that's not part of the guidance at this point in time.
Got it. And 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 it's 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?
No, Maheep, I don't think that we expect any change to happen. This government has already been very supportive, and a lot of that comes directly from the Prime Minister, as we all know. The government overall has also strong commercial reasons. One, of course, as we talked about, power demand is growing. Renewables is the cheapest, cleanest way to meet that power demand. There is a very strong economic and commercial reason for the whole renewable energy effort to carry on. But even beyond that, I don't expect anything to change because several alliance partners are also very supportive of renewables and have been in the past when they were earlier in State Governments. I would expect the same exact policy to continue and there will be a lot of continuity in policy-making in the coming few years.
Thanks for the questions.
Your next question comes from Angie Storozynski with Seaport. Angie, your line is open.
Yes, I'm here. I'm so sorry about it. So my first question, I noticed that the complex projects are now built and they came online and I know that they are 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 merchant, but again, is there any, you know, sort of confirmation of your theoretical models of how these assets might be working under the PPAs?
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 a wind project just like any other. And right now whatever is producing we’re selling into the exchange. So it's very hard to even forecast from there. I think it's only once the solar project comes online and the batteries come online that we will actually be able to combine the whole thing and start getting a better sense. However, for the last one year we have been able to digitally replicate the performance of the plant as if it were running over the course of the last year. We’ve been able to fine-tune the design and so on this aside. I would say that even once the whole plant comes online, there would not be very significant, if at all, any deviation from what we’ve anticipated because of the digital suitability that we've developed.
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., 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?
No, Angie, so far we have not seen any meaningful data from the earlier designs. Keep in mind that our wind assets are only about 12, 13 years old right now. The oldest assets that we have are so have not seen any wide dispersion yet. But you know, even if we were to replace them with newer turbines, it could not really be cost-effective to do that. The terms of the PPA often require us to continue with the same wind turbines that are installed. I don't think that repowering here is going to be a possibility, at least until the time the PPA is outstanding. After that, we could potentially use the same interconnect that we have, the same land that we have, and connect new wind turbines to the grid. Depending on whether the merchant market makes sense or some other PPA market makes sense, we can then look at that. But we are still at least a decade away from that.
And then the last one, when you show us projections of EBITDA and net debt or leverage, those are reflective of asset sell-downs. So basically it's your share of EBITDA and your share of net debt after accounting for minority interest. Is that right?
Kailash?
As of now, we are reporting the gross numbers for both the debt and the EBITDA.
But when you show projections like 15 gigawatts to 16 gigawatts of assets, and you show me the range of that EBITDA, would that reflect already assets, divestitures to finance this incremental EBITDA stream?
Only the assets which are sold fully, those get taken out from both the EBITDA and profits. The rest of the assets are consolidated on a gross basis, and then there's a minority interest takeout at the bottom.
At the net income level. Okay, thank you. Thanks.
Yes.
There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.