Adani Green Energy Ltd is embarking on an ambitious journey to significantly increase its renewable generation capacity, with plans to quadruple it by the year 2029-30. The company has already secured a substantial land bank to build mega solar plants, but the key challenge lies in winning bids and finding buyers to achieve this target.
Current Capacity and Expansion Plans
Adani Green currently boasts an installed capacity of 11.2 GW across solar, wind, and hybrid energy sources. In the ongoing financial year, the company is set to commission an additional 6 GW of capacity. Looking ahead, Adani Green aims to achieve a renewable energy capacity of 50 GW by the fiscal year 2030, including 5.5 GW of energy storage through pumped hydro.
According to Emkay Research, Adani Green’s renewable energy capacity is projected to grow at a compound annual growth rate of 30% between fiscal years 2024 and 2030. The improving capacity utilization is expected to boost sales by a CAGR of about 35%, with Ebitda forecasted to expand at a CAGR of 38% during this period.
Strategic Land Bank Acquisition
One of the key strategic moves by Adani Green has been the acquisition of a substantial land bank on lease, capable of accommodating more than 65 GW of capacity. This move is aimed at enabling faster project execution. The company’s projects are expected to be concentrated primarily in Gujarat, with the potential for 30 GW of generation capacity across solar and wind energy sources.
The location in Gujarat offers significant operational advantages, including strong solar radiation and high wind speed. Adani Green anticipates that these factors will help it utilize up to 34% of its capacity, a notable improvement over the industry average capacity utilization of 20%.
Market Strategy and Revenue Generation
While most electricity in India is typically sold through fixed-rate purchase agreements, Adani Green is planning to sell about 15% of its renewable energy in the spot market. This move could potentially yield higher prices in times of robust demand, but also entails the risk of finding no buyer.
Adani Green’s proactive approach to project commissioning has allowed it to sell power on a merchant basis until formal agreements kick in. In the June quarter, the company sold 21% of its power on a merchant basis, contributing approximately 30% to its total revenue for the period.
Financial Outlook and Investment Plans
Adani Green’s capital expenditure is expected to reach ₹24,000 crore in 2024-25, following an expenditure of around ₹17,000 crore in the previous fiscal year. The company has indicated that its total investment by fiscal year 2030 will exceed ₹2.4 trillion.
Despite a relatively high net debt-to-Ebitda ratio of 7.4x at the end of the last fiscal year, Adani Green aims to reduce this ratio to 5.5x by fiscal year 2025, fueled by the commissioning of new projects and rising profits. The recent investment of $444 million by France-based TotalEnergies is also anticipated to bolster the company’s financial position.
Market Performance and Investor Expectations
Adani Green’s stock has experienced a significant uptrend, gaining nearly 80% over the past year. This growth has been supported by strong profit expansion and positive outlook. The stock currently trades at an enterprise multiple of 15.2x based on expected earnings for fiscal year 2026, suggesting it is fairly priced.
Looking Ahead
While Adani Green has made substantial progress in expanding its renewable energy capacity and strengthening its market position, the company will need to deliver on its project commitments over the next few years to meet the high expectations of investors and stakeholders.
In Conclusion
Adani Green’s strategic investments in capacity building and market positioning reflect its commitment to sustainable energy growth. With a clear roadmap for expansion and a focus on operational efficiency, the company is poised to play a significant role in India’s renewable energy landscape. Investors and industry observers will be closely monitoring Adani Green’s progress as it strives to achieve its ambitious targets and solidify its position as a key player in the renewable energy sector.