Q3 2024 Renew Energy Global PLC Earnings Call

Participants

Nathan Judge; IR Officer; ReNew Energy Global Plc

Sumant Sinha; Founder, Chairman & CEO; ReNew Energy Global Plc

Kailash Vaswani; CFO; ReNew Energy Global Plc

Vaishali Sinha; Cofounder of ReNew & Chairperson of Sustainability; ReNew Energy Global Plc

Nikhil Nigania; Analyst; Bernstein

Justin Clare; Analyst; ROTH MKM Partners, LLC

Puneet Gulati; Analyst; HSBC

Maheep Mandloi; Analyst; Mizuho Securities USA LLC

Presentation

Operator

Thank you for standing by, and welcome to the new third-quarter fiscal year 2024 earnings report. (Operator Instructions).
I would now like to hand the conference over to Nathan Judge, Investor Relations. Go ahead.

Nathan Judge

Thank you, Betsy, and good morning, everyone, and thank you for joining us this morning. The Company issued a press release announcing results for its fiscal 2020 for third quarter ended December 31, 2023. The copy of the press release and presentation are available on the Investor Relations section on renews website at www.renew.com. With me today are Sumant Sinha, Founder, Chairman and CEO; Kailash Vaswani, our newly appointed CFO; and Vaishali Nigam Sinha, Co-Founder and Chairperson of Sustainability. After the prepared remarks, 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 on Form 6-K and the presentation on our website for a more complete description. Also contained in our presentation materials and annual report are certain non-IFRS measures that we reconciled to the most comparable IFRS measure. 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.

Sumant Sinha

Yes, hi. Thank you, Nathan and good morning and good evening to everybody on this call. I'm glad to have you on our third-quarter fiscal year ended 2024 earnings call. The calendar year 2023 marked, a significant milestone for the Indian renewable energy sector as well as for us. India is now the world's most populous nation, has experienced a surge in power demand, necessitating the need for more power.
In April of 2023, the Ministry of New and Renewable Energy that ramped up the auction calendar significantly in a bid to achieve the country's 500 gigawatt target for renewable energy installations. The government's commitment has not transpired into action and a record number of auctions have been conducted so far during the year. So far in fiscal 2024, we have seen more than 40 gigawatts of auctions being conducted, which is a significant increase over last year when about 12 gigawatts of capacity was auctioned.
Not only this we are also tracking and other 70 gigawatts of central and state tenders are expected to be auctioned over the next few months. As in India and and and intensified. It's moved made in India initiative to becoming global manufacturing hub more broadly, the imperative for security, reliable power becomes even more pronounced. This expansion of the addressable renewable energy market has provided developers such as us the most favorable environment in the renewable energy sector that we have seen yet.
As the number of auctions has increased significantly, competition has tailed off a little bit leading to the discovery of higher data rates. Subscription rate for new auction has declined significantly this fiscal year and were the lowest on record this past quarter. Often less than 100% of the capacity being off auction for complex projects resulting in auction clearing pretty much at the initial bid offer.
Year to date, we have seen an increase in tariff and in particular in wind auctions, which increased 14% year on year. But we see the ability to do wind makes us stand out in a market where there are far fewer developers with this ability.
We know that even with the increase and that is renewable energy continues to be the lowest cost stores for new electricity supply in the country. Considerably cheaper than the primary competitive alternate, which is coal power. Beyond rise in tariff we saw several other factors that are supporting better return, such as the record fall in the cost of solar modules, stable FX, adequate domestic debt financing and a significant reduction in receivable days.
The year started with a litany of challenges has become one of the most favorable market for the Renew in our history. As we approach the onset of fiscal year 2025, we eagerly anticipate leveraging the new opportunities that have arisen during the year, especially in complex from power, such as we round the clock power and street power projects that are currently under construction.
This demand for complex projects is clearly evident in devising percentage of such projects and such auctions. This fiscal year complex projects represented about 38% of total capacity being auctioned, significantly more than the 8% of the total amount last year. This is set to increase further to 44% of the tenders that we expect to be auctioned over the next several months. We continue to see higher returns and complex auctions and a greater share of our wins are in this subset.
Renew has -- and as a result our market share is better than any of our peers. Firstly modeling, these projects is not easy. Further executing complex projects requires expertise in developing well integrating multiple sources of power to the use of digital tools as well as robust project management.
Something that most players in the sector, lack. Our in house will EPC capability in-house digital labs and our ability to access the cheapest source of capital do ensure superior returns on our projects. The year is set to be a milestone year for us. As on the execution front that you will see a significant increase in our operating portfolio as most of the under-construction pipeline will become operational, providing top line and bottom line growth.
Now turning to highlights for the quarter on page 4. We are increasing the bottom end of our adjusted EBITDA guidance range to INR63 billion to INR66 billion. Amazing record breaking year for megawatt installation. We expect that about 1.75 gigawatts to 1.95 gigawatts will be generating revenue by the end of fiscal year 2024.
Beyond the currently commission 825 megawatts. We have elected 474 megawatts of wind turbines and another 620 megawatts of solar module installations. Our strategy of asset recycling continues to provide us with cost-effective capital for expansion. Last month, we signed a deal for the sale of a 300 megawatt solar assets commission two years ago. And we anticipate receiving proceeds of approximately USD82 million. By year end. The asset was valued at USD199 million.
This transaction will further bolster the substantial some days through asset recycling thus far at the same time, enhance the returns on capital deployed on projects. We expect that we'll realize a gain of about USD30 million to USD34 million as a gain in our Q4 '24 EBITDA.
Do know that at FY24 adjusted EBITDA guidance of INR63 to INR66 billion does not include the gain. Our growth trajectory remains robust. As we won an additional 3.6 gigawatts of RE projects during the quarter in a period when tariffs are rising, costs are falling and competition is near record lows. This underscores our ability to secure growth at attractive returns. We point this out because last year when all these factors were unfavorable and returns for new projects are much lower our market share was a mere 3%, well below our normal market share of 10% or thereabouts.
Comparing it to this year in an environment where returns are much higher. We have won about 15% of all auctions, we believe -- and that is on top of a bigger base. We believe that this illustrates our commitment to capital discipline rather than just market share. We are pleased also to report that our DSOs, our days sales outstanding have fallen below 100 days and stood at 86 days at the end of the quarter. Marking a significant improvement of 92 days within the span of the year. And an even greater improvement from the peak of 272 days only a couple of years ago.
Privatization of timely collection of tables remains paramount for us, as it fortifies our competitive stance in the market and has released nearly $200 million of cash for growth. We believe that DSOs will continue to improve over time. Furthermore, there has been a notable enhancement wind PLF this year.
Fourth quarter was the meaningful improvement over the [47%] PLF in the prior comparable quarter. And year to date, the wind PLF was about was at 29.2% better than the wind PLF of 27.3% last year. While the uptrend in wind PLF is encouraging and there is increasing evidence that wind speeds are recovering towards long-term normal levels in the long term, our guidance does not take in to take this into consideration in an effort to remain conservative.
I'm proud to say that we were profitable for the trailing 12 month period with a profit of USD44 million. We recognize that many investors consider profitability of the key investment decision metric, and these results should increase other universe of investors. While our cash flow from operations has always been positive and growing, we believe that we are now at the scale needed to be profitable consistently on an annual basis and be able to showcase the full value of our platform.
We reported cash from operations of USD616 million for the nine month period ended December 31, 2023, compared to USD595 million for the prior period. Our profit after tax was USD43 million for the nine month period this year compared to a loss in the prior comparable period, an improvement of almost USD100 million.
Turning to page 5, electricity demand, growth and the macroeconomic environment continues to favor RE development in India. Firstly, the auction markets continue to propel larger number of auctions and better tariffs. Over 40 gigawatt of auctions have already been completed year-to-date, and various state and central agencies are working towards another 70 gigawatts. Likely to be completed over the next few months.
Not only this, the share of complex projects went from 38% this year signaling a persistant towards complex projects further, the tariffs continue to trend upwards as there was less competition. Amongst the tenders that we are tracking, we expect the share of complex projects to be go up even further into the need for firm power in the country.
Secondly, cost to construct RE continues to improve as solar module prices that make up 40% to 50% of the total cost to construct a solar farm have fallen by around 55% from the prior quarter to hit historical lows of about USD0.11 per watt peak. So let me say that again, the foreign to hit $0.11 per watt peak. Innovation supply related challenges that concerned us last year were resolved as our own manufacturing facility came online during the year. We would note that the cost of sales is largely mirrored the decline seen in module prices, making a manufacturing cost competitive bid import after considering the BCD or import duties.
Turning to page 6, our patient and selective approach in auctions has ensured that we are able to deliver superior returns on our projects with over 40 gigawatts of projects auction in the current year that have been several auctions that were under subscriber. Lower competition in auctions enables us to lock in Superior tariffs, and we saw subscription levels lower than 100% in auctions for complex projects have in-house EPC CPC an integrated supply chain that ensures delivering large projects on time enable us to bid competitively securing higher returns.
Our digital and AI platform bundled with our experience in developing complex solutions provides us with a significant advantage over others. While we don't pursue market share, our market share has grown by almost five times compared to the prior fiscal year from having only a 3% market share last year when returns are much lower to about 15% market share this fiscal year. With projects that are projected to have significantly higher return. We'll continue to be disciplined in our approach, the growth and pursue the highest return opportunities in the market.
Turning to Page 7. Our core strength lies in our ability to execute projects over time and on time within budget and deliver initially expected because we own brand progress remains strong as we have directed about 1.9 gigawatts of assets on the ground of the total 825 megawatts of projects have already received COD approval. And in addition, we have corrected 474 megawatts of wind turbines and in-store 620 megawatts of solar modules.
During this period, we have also installed 150 megawatt hours battery storage facility for our peak power project. In addition, we also commissioned 276 kilometers of transmission during the quarter. We are beginning to see real constraints emerging and getting access to interconnection hub. And this new business for us is beginning to provide considerable competitive advantage in bidding for new projects.
With that, I would like to turn it over to Kailash us to grow with the latest financials.

Kailash Vaswani

Thank you, Sumanth. Turning to page 9 of interest from domestic lender for a project continues to be strong. Recently, we were able to refinance $325 million bond in the domestic market with an interest rate that was around 200 basis points lower than the landed interest rate. Through refinancing, we were once a week once again able to demonstrate how we have been able to provide long-term finance to our projects with interest rates up 9%.
In India, the effect were Indian RE deck has compressed significantly as the sector has matured. While we stay focused on domestic debt market given the low cost work USD bond market, we have seen yields on our own USD bond improved by about 200 basis points is [tightened] over the last four months.
It is also worth noting that the average period on our bonds are about the same level as it was at the beginning of the Fed tightening cycle back in 2022.
Turning to page 10. Our asset recycling program continues to see strong interest from international investors as well as domestic players. Last months we signed an agreement for the sale of 300 megawatt solar assets and expect to about $82 million of net proceeds by the year end, which is the fiscal year end. The proceeds from this asset sale are expected to be reinvested in projects costs to runrate EBITDA are 8.5 times to 7.5 times (sic- presentation, page 10, "6.5x to 7.5x) EBITDA should have even higher returns than the one just sold.
Subject to the rate at which we can raise growth capital from asset recycling, we should be able to grow 1 to 1.5 gigawatt net of asset recycling without having to issue any new shares. Asset recycling effectively provides us with long-term our growth capital at the cheapest possible cost of equity and thereby enabling us to grow while enhancing returns on capital.
Turning to Page 11. We reported profit after tax for nine month period ended 31 December 2023 of USD43 million as compared to a loss of approximately USD60 million in the prior year. This was driven primarily by higher revenues and savings and finance costs. During the quarter, we saw significant improvement in wind PLF as compared to the prior comparable quarter.
The wind PLF during the quarter was 17% compared to 14.7% in the same quarter last year, bolstering our confidence about the recovery in the long term and wind PLF towards normal normalized levels. Though our guidance expect inventories will be in the same as last year. Our operating capacity increased by 940 megawatt order last comparable quarter in the prior year, an increase of about 12%. We reported an EBITDA and adjusted EBITDA of USD150 million for Q3 FY24, an increase of about 8%. The higher EBITDA is timely attributable to additional revenue from projects commissioned during the period.
This was partially offset by higher operating costs in line with the increase in capacity.
Turning to Page 12. Our day sales outstanding now stands at only 86 days, an improvement of about 92 days from a year earlier. Our focus towards ensuring timely cash collection and pursuing discounts to resolve EU'sis now paying a dividend. During the year, we have been able to release about $82 million of cash flows in the current fiscal FY24 by timely collection of current tools as well as recovery for the older ones.
Turning to page 13. A balance sheet continues to expand and improve. Our cash balance stood at over $1.1 billion, excluding the $325 million, which was repaid in January of this year and a project level, net debt was about USD5.4 billion. During January of this, here, we refinanced our USD325 million bond maturing in April '24 saying 200 basis points and extending the maturity to 15 years. Based on the current level of interest rates, we continue to evaluate opportunities wherein we are able to refinance at lower interest rates than the coupon and on that debt.
This year, in addition to the $8 billion MoU that we signed with PFC and REC, we have signed an additional MOU of ADB for about $5.3 billion of debt financing, bringing the total amount of excess of capital to over $13 billion. This MoU enable us in creating multiple avenues to which we can access debt at competitive rates and reduce the interest rate burden on our profit and loss account.
With that, I would like to turn it over to Vaishali to talk about our ESG initiatives.

Vaishali Sinha

Thanks, Kailash. Turning to page 15, building on the positive momentum of the first quarter of sharing an update on some of the key ESG ratings and awards we have achieved. We received a score of 79.25. in refinitiv, which is an increase from FY21-'22. Best among all electric utilities and IPP Corporation, Indiana for fiscal year '22-'23, and second among our electric utility and peers globally.
We were also recognized as one of the top-performing companies by Sustainalytics both as regional and industrial leaders. We continued to maintain our CDP Climate Change rating to B, which is the management band, which is higher in the Asia region and average of C.
The same as the renewable power generation sector average of the B. In S&P CSA score has increased from to 53 from 41. We received multiple awards, including the prestigious Terra Carta Seal for actively leading the charge to create a climate and nature positive future. We also received the World Economic Forum Lighthouse for the second time for our leadership in the Fourth Industrial Revolution technologies and highest category of recognition, which is resilient by CII Climate Action Program, which is CAP 2.0.
Social responsiblities continues to remain integral to our business. Since 2014, we have insurance life of over a million people across 500 villages across India, spanning over 10 states. On the right-hand side of the debt as of the key programs, which also include employee participation underwriting life program, the electrification of 62 schools is under progress in partnership with HSBC.
The climate curriculum was rolled out to 9,000 students. Project Surya which is implemented and partnerships in units. Nearly 210 women have completed their training as renewable energy technicians who earlier used to work in a very hard solar excuse me, store farming area in Gujarat. Ninth addition of Gift Warmth Campaign, 2023 has benefited around 2,00,000 people back to you.

Kailash Vaswani

Turning to our annual guidance, we are raising the bottom end of our FY24 guidance range by 2% and now expect FY24 adjusted EBITDA of INR63 billion to INR66 billion. As we said earlier, this excludes gains on sale of assets on construction. We expect that about 1.75 gigawatts to 1.95 gigawatt will be generating revenue by the end of the year. As some of our products have received COD extensions. This prevents presents an opportunity to sell power on the exchange at prices often substantially higher than than the PPA tariff.
With regards to our FY25 guidance, we anticipate sharing our outlook with investors during our Q4 FY24 earnings call. We would remind investors that we sold 400 megawatts of assets this year that would have otherwise contributed around INR2 billion, in FY25, although the EBITDA contribution from the asset sale proceeds will be even greater in future years as the capital is redeployed.
Lastly, we also anticipate being conservative on our better assumptions in our FY25 guidance. While the weather turns have been flat versus the prior several years, we are also focused on delivering on our promises to investors. With that, we will be happy to answer any questions. Thank you.

Question and Answer Session

Operator

Thank you. (Operator Instructions).
Nikhil Nigania, Bernstein

Nikhil Nigania

Hi, thank you for taking my question on good set of numbers for my first question is on the competitive intensity. Good to see it come down. But would I would be keen to understand what is driving given why relative intensity has come down and auctions?

Sumant Sinha

So look, I think do you kind of post the answer the question itself, see last year, as we said, about 12 gigawatts of auction happens this year, that number is 40 gigawatts. And so I would say that most of our competitors has pretty full pipeline right now as do we and therefore and because you know, there are so many options happening in all, you can always been the next one.
So I think for all of the reasons, the competitive intensity or any given project on any given auction has come down by marketly

Nikhil Nigania

Got it. The second point, and I had is on the module price crash, which should benefit us also wanted to understand how much of the pipeline is the module prices loss and for how much of the balance part will be able to gain from this low-margin prices.

Sumant Sinha

No, you should assume that everything that we've been buying in the last three months and beyond will be benefiting from these lower prices. And therefore, actually, if I were to take a step back our decision to postpone execution of projects in the last financial year was actually because module prices that time were $0.26 to $0.28 was actually quite on the monthly bill because over the course of the last 12 months. But it has fallen so much. And so we are able to now commissioned the solar projects at dataset at sort of costs that you know, so significantly lower 20% to 30% lower in some cases compared to what they would have been had. We done them earlier.
So yes, from this point to from the last, I would say, three to four months. In fact, even all the modules that you're buying now are with lower module prices.

Nikhil Nigania

So would it be fair to assume most of the capacity coming up in FY25 should benefit from this?

Sumant Sinha

Yes, absolutely.

Nikhil Nigania

Sumant there's a latesr point there so then Renews own module manufacturing plant. But how is that faring? And how is that being able to compete against this $0.11 a watt peak module prices?

Sumant Sinha

Because as you know, there is first of all the 40% import duty. So that takes that $0.11 up to whatever close to $15.5. And that is not very dissimilar to what the cost of this will import modules pay the 25% BCD on a much lower number. The imported price of modules of sales is about out to us about $0.055, so 25%, and that is the $1.5 a little bit less than that.
So it gets you to the schedule sells at about $0.07 here in India and then the conversion price takes you up to about $0.15, $0.16. So we're pretty much at the same level as you would be if you're buying modules from China. Now also keep in mind the fact that ALM was supposed to come in from this year, 1 April. So any projects that were not grandfathered then have to we'll have to come by domestic volumes going forward. And therefore (multiple speakers) to add on to China are important modular business.

Nikhil Nigania

Got it. Are you also looking to exports of modules like some peers are ?

Sumant Sinha

Our first priority is to supply modules to ourselves. So we will look at first doing that. And secondly, to the extent that we have an overflow modules, which we probably will have an amount this year, we'll certainly look at selling that in whichever market gives us the best return. Now keep in mind one more thing that we'll also have a cell plant getting commissioned fairly soon. And that allows us to sell into the domestic DCR market where also the tariffs are higher because those acquired sales between in India as well.
And so therefore, we could do either of the two we could sell projects of its sales made in India into the PC market at a higher tariffs or we could sell overseas. Now we haven't we haven't to be honest with you. We are not sort of giving any sort of guidance on that right because obviously, we want to prioritize our own requirements first.

Nikhil Nigania

Understood. Last question from my side. He's been on the pipeline side. I saw some delay in the RTC project go to support local commission, but I wanted to understand what is the reason and be transmission incrementally becoming a bottleneck as you seem to be hitting in the presentation of our commissioning of future renewable capacity in India?

Sumant Sinha

So yes, I think wondering, one of the things that has happened this year is that because the amount of renewables is now crossing certain levels, the grid manager, which is very decentralized to Electricity Authority, has decided to really become a lot more careful about giving connectivity approval and commissioning approvals to new renewable energy projects. So these processes of commissioning, therefore, are taking longer than they were taking earlier.
And that is why you would perhaps see that the amount of commissioning this year in the RV sector is at this point of the year, lower than what would have been expected for the industry as a whole, largely because of these new comer connectivity and commissioning requirements that are thought to be now has kept at a higher standard by the by the grid managers. And I think that's fair. That's you know, it's a perfectly legitimate thing for them to do. But what that has maintained project ready, we will turn it on and get it connected to the grid within a matter of two, three days. That process now is taking a lot longer thinking as on the four to six weeks now.
And that in some ways is delaying the commissioning of new projects for everybody, not just for us. Second thing that is happening is that the connectivity approvers into the grid, and I'm really getting a little bit technical here are also taking a lot longer than we used to take earlier because now it's currently for these complex projects which are getting commissioned for the first time, are going to be very connected to the grid for the first time. The grid managers want us to do our lead very high standards, which require very extensive modeling of how the whole plant would actually operate under very many different circumstances and situations.
And that, by the way, is also very big learning for us because we have now gone through this process, both for RTC and for peak power. And therefore, we are the only company that has gone through the process of what does this connectivity process actually implying entail? And so it's not shopped at up to another of our is sort of said that we now have on these complex projects. We've gone through that. And frankly, it's taken us almost three to four months to get some of these connectivity approvals, which you should take literally a month earlier.
So all of that, that's the cause some delays in connections to the grid. And that is why you see that we are now over the next month or so going to be connecting a lot of projects into the grid.

Hi Sumant (multiple speakers) You may also want to talk a little bit about the opportunity to presell some of the power for our waiting for those CODs.

Sumant Sinha

Yes. So what happened was I think that is happening is that because now this commissioning time line, has got extended what we are being allowed to do is to sell the moment the plant is ready. We can sell the power into the merchant market while we await comissioning is the final commissioning approvals. And because that process can be up to a couple of months long for those couple of months, we are able to, therefore get some merchant tariff rather than the PPA tariffs. And that, as you know, in a number of cases, is almost double the PPA tariffs.
So for the new projects that we're commissioning, we're actually able to realize, given this new process that has not been imposed from, as I said, for good reasons. But that is also, therefore allowing us to generate higher profitability for a certain period of time by selling into the merchant market.

Understood. Very clear. Thank you so much for answering the questions.

Operator

Justin Clare, MKM Partners

Justin Clare

Yes, hi. thanks for taking the question.So first here you indicated you expect to sign PPAs for the 5.9 gigawatts of capacity that you've won it actually year-to-date in fiscal '24 in fiscal '25. And then the commissioning of those projects is expected in the FY26 to '29. I was wondering if you could give us a little bit better sense as to when those projects might be completed as it is that it can we expect it to be even over those years? Or is it likely to be more than capacity in fiscal '26-'27? And then how should we think about the time wise for projects after you sign a PPA, a little more time available if it's a complex project?

Sumant Sinha

Yes. Justin hello. So first of all, on your first question of when should this causes decommission, it partly depends on the PPAs signed have because, as you know, the clock starts ticking from that point on and typically for complex projects, we have two years and execute projects, but and also to say, I'm extent, depends on vendor transmission substations will get ready because obviously we assume that these that based on the availability that is provided to us by the by the transmission operator, that certain substations and comp at certain points in time.
So we made those assumptions and we can get connectivity into the substation. Not substations don't always necessarily count on the time certified, sell them to get delayed. And some of them in fact, are going to be getting ready beyond the take care of the time line for us does get extended to be aligned with the commissioning time line of the transmission substation.
So it's a little bit variable. Therefore, an III. I hesitate to give you an answer on this. What we will do have adjusted news over the next few months. We will as we think through this a little bit more. And as we get more clarity on the PPA filing dates, we will be able to get a firmer estimate and we will start to share that with your perhaps in the next earnings call a few months down the road.

Nathan Judge

Just remember Justin that down to those are not in our guidance or projections, right? So as we as Sumant rightly mentioned, as we sign those PPAs and will provide will have more confidence in the delivery schedules, et cetera, who will provide motor granularity around that.

Justin Clare

Right. Okay. Okay. Thanks. And so I guess just given the increase in auctions that we see significantly more volume here, how are you thinking about, your annual capacity to build? I think in the past, you've talked about 2.5 to 3 gigawatts a year. Is that the number that we should be thinking about today or so? Is it possible that you would look to increase that number given the opportunity?

Sumant Sinha

Yes. As you know, the amount of megawatts that we can execute in a year is dependent on a few different factors. Of course, the availability of PPAs is one of those, but it also depends, as you know, on on capital availability and funding capability from execution capability and so on. So I would say that in oh 2.5 to 3 gigawatts are still a fair number to assume. And of course, in a given year, it may be more than that of a little bit less than that depending on the transmission of any suspicion coming up for the CODs like for different projects and so on.
So there will be some variability around that. But but that is a fair assumption to make. I think also what will happened Justin is that as we see the number of beds, it will continue to stay at a high level and the attractiveness of those beds continues to be fairly good. We were trying to see how we can ramp up our execution capability over over time. But that is something that we have said we'll have a lot will have to really do some work on, I think for the time the making that assumption that the number that you talked about, I think there's a fair assumption to make.

Operator

Puneet Gulati, HSBC

Puneet Gulati

Hi congrats on good performance. My first question is on your CapEx. Given the fall in 14 prices, are you inclined to lower your CapEx guidance or should we assume this is still a realistic number?

Sumant Sinha

Kailash, do you want to take that?

Kailash Vaswani

So last month we opened a call in a while in what we are likely to see some benefit accruing from that. We haven't factored that into the guidance yet because we would like to actually realize those benefits before we begin.

Puneet Gulati

And any indication of how much could that benefit be?

Kailash Vaswani

So the bet that benefit the you know, we are executing in a range and you know, we can work it out and you know, we can share with you, basis on certain assumptions.

Puneet Gulati

And has the Capex for for the entire balance remaining capacity tied up or will that also be tied up over a period of time?

Kailash Vaswani

Nor the large part of the capacity, which is currently in execution, which is the peak power RTC project and the pipeline that we're executing of solar and wind projects on B2B and Becky project that is largely tied up, which will be a total of somewhere in the range of around 10.5, 11 gigawatt for capacity beyond that, it's yet to be tied up.

Puneet Gulati

10.5 gigawatt -- you mean 2 additional gigawatt over the 8.5 gigawatt right?

Kailash Vaswani

Yes, whatever we are currently constructing is tied up, whatever is to getting tied up from FY25 for that. We are in the process of tying it up right now.

Puneet Gulati

Okay. And did I hear it right that this quarter alone you might be commissioning more than a gigawatt?

Kailash Vaswani

Yes, because as a as someone mentioned earlier, you know, with all the capacity is fully erected and ready for commissioning is just waiting for some approvals. And once we get that, then it will be commissioned.
So of the 1.9 gigawatt, 800 gigawatt is already commissioned and another gigawatt is ready for commissioning gave commentary in the next I know a few weeks.

Nathan Judge

And Anthony, just again, as a reminder, yes, just straight As a reminder, about 1.9 gigawatts will actually be generating revenue by year end our fiscal year 2024

Puneet Gulati

Yes. Understood. And secondly, you won 5.9 gigawatts of additional projects year-to-date. At how much of these, how much PPAs have been signed so far?

Kailash Vaswani

Right now Puneet 400 megawatt PPA signed now the project with some channel and the rest of it is currently under discussion yet.

Puneet Gulati

Understood. And this is the total capacity of the metric contracted capacity.

Sumant Sinha

This will be the RE portion of the capacity in some cases where it is RTC 2, for example, or hybrid type projects, then the contracted capacity would be lesser to that extent.

Puneet Gulati

Understood. That's helpful. And lastly, if you can we don't give some color on what's happening on the ALM front and the ministry has put it on behind.What does it mean for you?

Sumant Sinha

Yes. So look, I think the government is still sort of thinking through exactly what ALM side of maybe where some of the original circular, which, you know, we've said basically that they were going to be certainly exceptions, but we have now taken it back and they're still sort of money around what exactly they would like to have a because it obviously competing interests here.
So I think, look, we just have to be patient and wait for them to finally decide what they want to do. So I can't give you any guidance unfortunately on it. But as of now ALM is supposed to come from 1 April.

Puneet Gulati

So incase no further announcement comes from the ministry, ALM will get defected from first April.

Sumant Sinha

That's right. But the reality is that there will be something that to come out soon. So I think we just have to wait for it. But look, obviously, we are in as well as in both the developer and as a manufacturer, we are closely in touch with the government on ALM
Now if they allow some relaxation of element to that extent our IDP business again. And to the extent that they don't allow the relaxation to that extent our manufacturing side gain. So I think we are pretty hedged on the situation at this point in time.

Puneet Gulati

Okay. And then lastly, if I may have noticed the solar PLS this quarter is lower versus the last year the same period is an issue on the irrigation side. This time?

Sumant Sinha

No, Puneet I don't think once we can make come to any conclusions from just one quarter as we have to look at the whole year before, we can come to a point of view. So I think one quarter you have these variations, frankly.

Puneet Gulati

Okay. Okay. Fair enough. That's all from my side.

Operator

(Operator Instructions) Maheep Mandloi, Mizuho Securities USA LLC.

Maheep Mandloi

Hey, guys, good evening and good morning to those thanks for questions. Just quick housekeeping on the guidance in Q2 for FY24. And can you just confirm that that's mainly due to the merchant sale before final commissioning of the bar traders? Anything else on the guidance increase here?

Sumant Sinha

So on the guidance increase, really why we're getting closer to the end of the fiscal year. Obviously, there's more visibility on what we are tracking against annual given the field and that we are having on the resource side and on the expense side, both of which has been, as you know, revise the guidance.
So, you know, add close to grow the real reality, which will actually pan out. So that is what had driven the increase in the guidance. Not really anything to do with merchant sales as of now.

Maheep Mandloi

Thanks. (technical difficulty)

Sumant Sinha

I'm sorry, can say that again not very clear.

Maheep Mandloi

Any guidance on how to think about too much into the U.S. are the incremental EBITDA from selling carbon, the merchant markets next year?

Sumant Sinha

So guidance on merchant market next year. Is that the question right?

Maheep Mandloi

Just the incremental EBITDA generation kind of talked about the opportunities are setting in the merchant markets, right? So just trying to think through how does that impact the operations in Q4 or next year?

Sumant Sinha

So so first of all, as you know, we keep our exposure to merchant around somewhat within 10% to 15% level above the portfolio. Now, what's happening is that some of these opportunities where we are able to intermittently sort about the merchant market before we sell it into the PPA.
Those are opportunities that we're trying to capitalize on wherever they occur. Since we haven't yet given you guidance for what the base case would be next year. So it'a very hard to sort of give you a sense of what the extra revenue might be out of merchant for next year. I think we just put all that together and then give you guys some sense of all of that on June call, for the full year results.

Nathan Judge

Let me do the forecast the full year and he did it appear under a little bit lower to that as well. One thing that will we obviously are flagging is that as we give guidance, we will want to start the year with conservative expectations, right? So what we are saying is that there is a very that could be a significant opportunity, but we will likely take a more conservative view, what's our initial guidance.

Maheep Mandloi

Got you. And then one question on the manufacturing front near your lines right now, mono buckets, I'm not wrong right in India, and we keep having increased ore supply on the Topcon side loading in Asia. So any thoughts on that competitive pressure, the government to pay them. And when it comes into effect next year after that, would that require you to upgrade your lines or anything thoughts on that transition?

Sumant Sinha

Yes. So look, the situation is that up the module line require relatively little change to move them from Monocon to Topcon. Okay. And it's something that can be fairly quickly, done. Without significant CapEx. So that is something that we will will will be that we will be looking at doing over the course of the coming year
As far as the cell line is concerned that cell line is is concerned that cell line is right now monocon cell line. And sense is ofcourse that Monocon will continue for some more time, and so to that extent we will continue to operate this line. As a Monocon lines.
And keep in mind, is also only 2.5 gigawatts of sales versus 6.5 gigawatts of modules. And as as we as we as the market moves more to Topcon, then we will consider adding some if we decide to add more cell lines , which we have to wait and see then those we could move towards Topcon.
But at this point, we will continue to operate a mono product line of 2.5 gigawatts for cells and modules will keep 2.5 to accommodate the Monocon line and the balance, we will move, as I said, at negligible cost to Topcon.

Maheep Mandloi

Appreciate the color and I'll take the rest of my time. Thank you.

Operator

That does conclude our Q&A session, and we'll conclude our conference for today. Thank you for participating. You may now disconnect.