Adani Green Q1 profit rises about 20% as clean energy capacity crosses 20 GW

Mumbai: Adani Green Energy Ltd's profit for the June quarter rose by nearly a fifth, driven by its operational clean energy capacity crossing the 20-gigawatt (GW) mark, even as it continued to face constraints due to inadequate power evacuation capacity in the country.

To reduce the uncertainty in its earnings, the renewable energy arm of the Adani Group signed a pact with the power distribution arm of the group, Adani Energy Solutions Ltd (AESL), to supply 4 GW power. The capacity earlier went to the merchant market. This means that the power that the company was selling on power exchanges would now be sold to AESL at a fixed price, removing volatility.

Adani Green's profit attributable to shareholders stood at ₹845 crore in the quarter ended June, compared to ₹713 crore in the corresponding quarter last year.

Revenue from power sales increased nearly 30% year-on-year to ₹4,280 crore. Earnings before interest, tax, depreciation and amortization (Ebitda) from power supply grew by a third to 4,122 crore.

Curtailment, or the intentional restriction of power output due to grid capacity shortages, shaved 5-7% off the company’s Ebitda, its chief executive officer Ashish Khanna said in a post-earnings analyst call on Wednesday. However, he guided for improved performance ahead as new grid capacities become operational.

“Gradually, as and when more transmission lines are going to come up, we do foresee these tendencies of curtailment to weed out. And by the end of this calendar year, our expectation is that there should not be any curtailment, at least from Khavda, for all the capacities which we have installed,” he said.

Shares of Adani Green settled 4.5% lower at ₹1,472 on the NSE on Wednesday.

During the quarter, the company re-classified about 4 GW of merchant power projects to the C&I (commercial and industrial) segment under a contract with AESL. Going forward, the company has indicated that it will shift all capacity originally earmarked for the merchant segment to firm contracts with AESL.

“So all that, which was supposedly merchant for us, to de-risk it, we have tied up and going to tie up with AESL,” Khanna said.

“Projects that were initially planned under the merchant model will now be developed and monetized as C&I projects through this partnership, providing greater revenue visibility and lowering exposure to merchant power price fluctuations,” according to Harshraj Aggarwal, executive vice-president, institutional equity research, Yes Securities. “The projects are structured to generate stable long-term returns, with contract tenures of up to 25 years for solar and wind and 15 years for BESS depending on individual project specifications.”

Adani Green’s operating capacity was 20.1 GW as of 30 June, the first renewable energy company in India to cross the 20-gigawatt milestone. Of this, 9.5 gigawatts was in Khavda, where the company is building the world’s largest renewable energy site with 30-gigawatt capacity by 2029.

Adani Green has set a target of reaching 50 gigawatt capacity by 2030.

The company also had 3.5 gigawatt-hour of battery energy storage system (BESS) capacity as of 30 June, the largest in India. Its target is to surpass 10 gigawatt-hours by the end of this financial year. For context, 10 gigawatt-hour BESS systems can meet the peak demand of Mumbai (4.6 gigawatt) for over two hours.

Nehal chronicles India’s top conglomerates for Mint. From navigating the complexities of big-bang mergers and large-scale fundraises to decoding high-profile recruitments and seemingly inexplicable corporate pivots, Nehal focuses on unpacking the long-term strategies of the country’s most influential business houses. He aims to provide readers with a clear-eyed view of how these corporate titans shape the broader Indian economy.<br><br>His professional journey began at The Economic Times in 2018, where he spent over five years before joining Mint in 2023. Over his career, he has tracked diverse sectors lik...