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Operator
Thank you for standing by and welcome to the Renew Energy's third quarter fiscal 2022 earnings call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Nathan Judge. Please go ahead.
Nathan
Thank you and good morning, everyone, and thank you for joining us. On Thursday evening, the company issued a press release announcing results for the first nine months and third quarter of fiscal 2022 ended December 31st, 2021. A copy of the press release and the presentation are available on the investor relations section of Renew's website at www.renewpower.in. With me today are Sumanth Sinha, founder, chairman, and CEO, and Kailash Vaswani, President of Finance and Interim CFO. Samant will start the call by going through an overview of the company and recent key highlights. Kailash will then provide an update on the quarter and then we will wrap up the call with Samant reiterating our adjusted FY 2022 EBITDA, excluding the impact of weather, our forecast of $810 million. After this, we will open up the call for questions. Please note our safe harbor statements are contained within our press release presentation materials and 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 the press release we furnish in our form 6K and 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 comparable IFRS measures, and these reconciliations are also available on our website in the press release, presentation materials, and annual report. It is now my pleasure to hand it over to Samant.
Kailash Vaswani
Thank you, Nathan, and a good morning to everybody on the call. Our company, RNW, has been publicly listed on NASDAQ for six months, and a lot has happened since our last earnings call in November that we are, in fact, excited to recap for you. We continue to believe that RNW is one of the most compelling investment opportunities in the renewable energy sector today. We realize that many investors are new to the story, so I would like to provide a quick recap on page five. Renew is one of the leading renewable energy companies in India and also one of the largest renewable energy companies globally. More than 70% of our portfolio is already operating, and most of the assets that are in development have PPS that are for 25 years with fixed tariffs providing predictability. Our portfolio is also balanced between solar and wind. Our scale and vertical integration differentiates us in multiple ways, including being more efficient and lower cost, having greater access to cheaper capital, and investing for the future to retain our competitive edge in a young and rapidly evolving market with maintaining higher EBITDA margins. We have a long track record of execution, and have delivered equity IRRs of between 16 and 20% consistently over time. We are emphatic about capital discipline as evidenced by our recently announced share buyback. India is now one of the largest and fastest growing renewable energy markets globally and is committed to increasing the installed capacity of renewable energy by over fourfold through 2030. Renewable energy makes sense for the consumer as it is the lowest-cost source of new electricity capacity in the country today. The Indian renewables market continues to mature, and this is really playing to our strengths. On page six, we have provided a broad segmentation of how we view the market today, broken into the plain vanilla renewable energy, which currently has the most competition, and return opportunities at the lower end of our targeted range. and the higher return segments in intelligent energy solutions, M&A, and corporate PPAs that provide higher returns and lower competition. More of our growth will be from segments that have higher returns, which Renew has a differentiated advantage in. Focusing on the intelligent energy solution segment, for a moment, distribution companies are increasingly needing electricity that has a more consistent or firm profile. With our expertise across renewable energy technologies, including wind, solar, and storage, we believe that we are one of the few Indian renewable energy providers that can provide baseload power in the market today. In addition, given our expertise and past investments in the intelligent energy solution segment, we believe that we are the lowest cost provider of firm power from renewable energy sources in India today. Our locked-in growth remains robust and on track with our previously announced guidance as seen on page 7. As of today, we have 7.3 gigawatts operating, up from 5.6 gigawatts that we had operating 9 months ago. We continue to expect our FI22 adjusted EBITDA, excluding the impact of weather, which was approximately $55 million in the first 9 months of this fiscal year so far, to be approximately $810 million. I do want to point out that all of our expected FI22 EBITDA is coming from operating and completed capacity. We expect to deliver EBITDA of over $1.1 billion annually from our 10.2 gigawatt portfolio, which is actually nearly double our EBITDA that we reported last year. We do have confidence in achieving this growth as about a billion dollars of the EBITDA should be generated from commission projects or have assigned PPA that are in construction phase. Moving on to page eight on recent developments since our last earnings call, there has been some progress in resolving the Andhra Pradesh Discom Court case. We have also got favorable rulings from the court and regulator in Karnataka and Maharashtra states. Final hearings occurred earlier this month and we anticipate a ruling on the Andhra Pradesh issue shortly. Please note that a favorable ruling would improve our financial position relative to our guidance. Despite all of the interest rate dislocations, we have also just completed a $400 million green bond issuance with a US dollar coupon of 4.5%. Net of hedging costs, the landed interest rate in INR terms was 8.4%. The initial use of proceeds are expected to refinance near-term maturities, saving the company about $5 million of interest expense annually. We continue to see favorable terms to continue refinancing at rates better than we currently have, which we will discuss shortly. We also announced this quarter the sale of our rooftop business for about $90 million at an EV to run rate EBITDA multiple of about 9.5 times. We decided to monetize this business for several reasons. Structurally, the rooftop business is a different business than our large-scale ground-mount focus, and the sale allows us to allocate capital to hire at larger utility-scale projects. In addition, we saw an attractive opportunity to redeploy capital to buy back our stock at an EV200 adjusted EBITDA multiple of only 7.6, creating significant value for ourselves. This is also a good segue into our $250 million share repurchase program. Earlier this month, we announced a share buyback as we found the value of the stock to be our highest return opportunity of scale. We are committed to capital discipline and will allocate capital to the highest return opportunities, whether it is an organic growth, M&A, or our own shares. Turning to accounts receivables on page nine, As of December 31, 2021, our outstanding accounts receivables stood at $606 million, which we recognize is high. We believe that the DSO, however, has peaked at the end of the second quarter of 2022 and will continue to improve going forward. And when you look into what constitutes our past due accounts receivables, you will see that four state DISCOMs account for the vast majority of our overdue receivables. We believe that we can improve our payment cycles with these states. In particular, we have for the first time taken our customers in Karnataka, Maharashtra, and Madhya Pradesh to court to accelerate recovery. The increase in receivables was understandable during COVID. However, now electricity demand is at new highs and payments to the discoms are being made in a more timely manner. And therefore, we have made some progress towards improving our VSOs. In Karnataka, the High Court directed the discoms in the state to clear all outstanding dues payable, which is about $90 million for us. In Maharashtra, the state electricity regulator directed the state distribution company to submit a clear plan to clear all outstanding receivables. Our court case in Madhya Pradesh is proceeding, and we expect a ruling later this year. Please do note that full recovery from the state, that even a favorable court ruling, is likely to be over some period of time. Turning to the court case in Andhra Pradesh or AP, the drawn-out case has finally concluded its hearings, and we do expect a ruling by no later than the end of March. We believe that we have a strong case, and if we win the case, we would look to recover about $200 million over a period of time. The recovery of past due receivables is an upside to our long-term guidance provided last year, and we will not need to issue new shares if an outcome in any of these cases is unfavorable to us. The combination of company initiatives, legal and regulatory proceedings, central government support, improvement in electricity demand for distribution utilities, and a shift towards central government agencies that have a strong record of on-time payment will result in a major improvement in our DSOs over the next several years. With regard to partnerships, we recently announced joint ventures with L&T, India's leading engineering and EPC company, and Fluence, a global leader in battery technology. These initiatives are consistent with our past practices of making small investments now to be a leader in future large opportunities. We believe that these partnerships will provide competitive advantages to us and position us extremely well for the next stage of growth in Indian renewables, which will be based around both hydrogen and batteries. And in fact, India has recently announced a green hydrogen policy and is only one of the few countries to have announced such a policy. The policy includes major incentives such as free transmission, open access, and provisions to bank power. We believe that the government of India wants major industries to commit to green energy and decarbonization, and an important step forward would be a green hydrogen purchase obligation. Overall, we think that green hydrogen represents about a $60 billion investment opportunity by 2030. Approximately 70% of the capex required for a green hydrogen plant is renewable energy, where we expect to contribute our expertise to the joint venture. L&T has a depth of knowledge on the last mile, the electrolyzers, connecting to the plant and storage, et cetera. We believe that this partnership is one of the lowest cost providers of green hydrogen in India. We expect that there will be numerous bids over the coming years and we will provide updates to all of you as events unfold. We also entered into an agreement with Fluence to provide a market leading energy storage solution in India. Fluent brings significant intellectual property leadership in the battery segment and currently is the only company that has an operational utility scale battery operating in India at the moment. The projected market size is equivalent to about 27 gigawatts by 2030. Before I turn it over to Kailash, I would also like to say a word on our CFO Muthu's announcement to move on from Renew Power to pursue other interests. Since joining us in August 2019, Buthu has been a valued member of the Renewal Leadership Team and played an instrumental role in the company's lifting on the NASDAQ last year. We do express our sincere gratitude for his contribution and wish him the best for his future endeavors. His resignation shall be effective on or around 31st March 2022. Kailash Vaswani will be the Interim Chief Financial Officer till the Board appoints our next CFO. As an introduction to Kailash, who most of you would previously have met, Kailash has been a valued member of Renew's senior management team right since the inception, about 11 years ago. Kailash has directly been responsible for all of Renew's fundraising and all of our M&A activities, as well as our cash flow and treasury management. With that, I will turn it over to Kailash to discuss our quarterly results. Thank you. Thank you, Sumanth. Looking at page 12, which provides highlights of the third fiscal quarter, we have 7.3 gigawatts operating as of today after the addition of 1.1 gigawatts this quarter. The 1.7 gigawatt addition this fiscal year was particularly commendable given the challenges of COVID and supply chain disruptions. Our revenues or labeled total income under IFRS in the first nine months of fiscal 22 rose 26% on the year. while our adjusted EBITDA increased by more than 27%, and the cash flow to equity jumped almost 116%. Turning to page 13, which provides a reconciliation of weather-adjusted EBITDA to our reported results, weather-adjusted EBITDA in the first nine months of FY22 was $626 million, or about 77% of our FY22 weather-adjusted EBITDA guidance of $810 million, which puts us on track to achieve our guidance. weather improved from last year, although it remains below normal levels, and has had about a $55 million negative impact in the first nine months of this fiscal year. We do expect our operating capacity will be around 8.2 gigawatt by year end, although it is possible that commissioning of some small amount of capacity may slip into the early parts of April. We have recently signed binding term sheets for another 500 megawatt of acquisitions which will add to the above number. One of the frequent questions we get asked is about supply cost inflation, which we discussed on page 14. The project cost for Megawatts added during the first nine months of this fiscal year had very little impact for higher supply costs. Whilst there has been some increase in costs relative to budget for projects we are delivering for the remainder of the year, after considering the lower financing costs that we are realizing in the market today, We continue to expect that our projects under construction will deliver an equity IRR within our targeted range of 16% to 20%. Turning to slide 15, which highlights our interest rate risk management strategy, the majority of our debt is fixed, and only about 15% to 16% of our total debt would have near-term impact from interest rate increases. Every 100 BIP change in short-term borrowing rate for all these variable cost debts will equal to about a 2% impact on the cash flow to equity annually. So again, very marginal. Despite the recent increase in interest rates globally, we are still seeing very favorable debt sanctions below 8% in the Indian market and from overseas lenders, which is less than our average cost of debt. We have financed and refinanced debt in excess of $1.5 billion over the last 12 months, resulting in decline in our average cost of debt to 8.9% going forward, compared to 9.4% we recorded over the past nine months. In recent transactions, we have seen rates as low as 6.5% to 7.5% as well. We are working towards refinancing our floating rate debt to fixed rates for the long term. With that, I'll turn it over to Soman for guidance and closing remarks. Yeah, thank you, Kailash. I'm very happy to report that despite the uncertainty around supply chain issues and COVID, We do continue to be on track with our adjusted EBITDA guidance for this year. We do believe that we will achieve $810 million of EBITDA after excluding the negative impact of weather, which we've said has been about $55 million so far through the first nine months of fiscal 2022. As it looks currently, we also should be having 8.2 gigawatts operational by around April or May, depending on when our acquisitions close. Turning to slide 17, We are also reiterating our guidance on a run rate EBITDA basis. Once our 10.2 gigawatts portfolio is completed over the next 18 months or so, we expect EBITDA will be at least $1.1 billion. We expect that we will have about $5.7 billion of net debt on our books or a 4.9 times debt to run rate EBITDA leverage ratio once the 10.2 gigawatts is fully completed. We expect our cash flow to equity run rate to improve meaningfully as well to $400 million on an annualized basis once the 10.2 gigawatts are operational. Importantly, our portfolio is fully equity funded. In fact, we do not need to issue any new shares to reach 18 gigawatts. And at 18 gigawatts, our cash flow generation should be sufficient to self-fund 3.5 to 4 gigawatts of growth annually without raising any external S&P. With this, let me stop and we will, of course, be happy to take any questions.
Operator
Thank you. Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up your handset to ask your question. Our first question comes from Julian Dumoulin-Smith from Bank of America.
Julian Dumoulin - Smith
Please go ahead. Hey, this is actually Cody Clark on for Julian. Thanks for taking my question. So first, can you give us some additional color on the year end 22 operating portfolio guidance of 8.3 gigawatts? We have 500 megawatts in acquisitions coming down the pipe. Maybe they slip a month or two and the remaining 300 megawatts is organic or... Yeah, no, that's right. Or they're additional...
Kailash Vaswani
No, it is organic. So we will be commissioning another approximately about 300 to 400 megawatts between now and the end of the financial year. And then the balance, as we said, is the acquisition.
Julian Dumoulin - Smith
Got it. And confidence in the adjusted EBITDA guidance is not really impacted because these are small contributions to the full year guidance anyways.
Kailash Vaswani
That's right. That's right. Okay.
Julian Dumoulin - Smith
Okay, and then just to follow up around valuations for renewables projects, just wondering if you can talk through kind of the strategy of potentially selling minority stakes and assets. It seems like it could be accretive to be able to redeploy the capital into new growth projects or even further support the buyback based on where shares are trading. Just curious if you have any thoughts there.
Kailash Vaswani
Yeah, so you're absolutely right. I think currently we see sales in the market for assets in India in the private market at about anything from 9 to 10 times. And so there is an opportunity. And we saw that in the sale of our rooftop portfolio, which is at 9.5 times. So our view is that we should be, for the quality of assets that we have, we should be able to get those kinds of multiples going forward. And frankly, there are a number of people who, financial investors and others who would like to acquire these assets from us and be in partnership with us. So that is something we can certainly look at doing and recycle our capital and sort of increase the velocity of our capital a little bit. Historically, we have not done that, but I think it's something that we're now looking at doing more of as we go forward. And of course, with the capital that we can get freed up, we can then deploy that into other high return projects, or use that for the buyback that we've already announced. So those are obviously uses of that capital. And so that's really what we are looking at at this point of time. And of course, what that also means is that for the capital that we would have invested in those projects, the IRR on those then obviously tends to go up quite substantially because we are then able to sell minority stakes at much lower than equity IRRs for those projects. So it's actually a fairly... a positive thing for us to do. It allows us to increase the return equity on our invested capital and allows us to recycle capital at a faster pace and deploy it into whichever areas we feel are giving us the best returns.
Julian Dumoulin - Smith
Okay, understood. That's helpful. And just one last one, if I can, just around weather impact, you know, it continued to be a drag in the third quarter. And just wondering if you have any updated thoughts on maybe reevaluating the wind resource baseline across your portfolio at year end?
Kailash Vaswani
Yeah, we will certainly look at doing that. As you know, we had not a great year the year prior. And then, of course, this year has also not been good. Of course, the years before that were by and large in line with the long-term forecast. But I think having had two years of subpar performance, We will, I think, over the course of this current year, we will look at re-looking at the long-term forecast. We'll hire an external agency to help us do that. We'll probably wait for this current high wind season over the course of the middle of this year to get done so that we have a little bit more data. And I think then we'll re-examine and see whether there is any merit or reason for us to look at changing any of our and if there is, of course, we'll let you all know. But we'll do a considered thoughtful exercise on that.
Julian Dumoulin - Smith
Okay, got it. Thanks so much for the time. Appreciate it.
Operator
Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Our next question comes from Justin Clare from Ross Capital Partners. Please go ahead.
Justin Clare
Hi, everyone. Thanks for taking our questions here. First off on fiscal year 23, just wondering if you could give us an update on how you're thinking about portfolio growth as we move into next year. you know, if you could share, you know, how many megawatts you might add for wind or for solar next year, and then how much could come from, you know, in-house development versus acquisitions, and then maybe also how you're thinking about the potential for new auctions next year and whether you could, you know, win in new auctions and then also add those assets, you know, over the next year.
Kailash Vaswani
Yeah, Nathan, do you want to talk about guidance for next year?
Nathan
Yeah, hi, Justin. So when you look at our expectations for next year, we have essentially going to be bringing on roughly about 18, well, 10.3 gigawatts over the next 18 months from our current level. That does not include the 500 megawatts of binding term sheet acquisitions that we've just announced. So as we look at it today, Right now, we're expecting that to come on kind of mid-summer of next year. And then we're also continuing to evaluate the M&A market. Clearly, M&A markets are dependent upon valuation. And obviously, our share price is at a level that we view positively relative to that market. So we still continue to think there's plenty of opportunity. And we'll make that commitment to capital where the highest return is. Samant, do you want to talk about the outlook for the market?
Kailash Vaswani
Yeah, look, I think the outlook for the market is extremely positive still. As you all know, there was a backlog of PPAs that Secchi had to still get done. A lot of that backlog is now being cleared in light of new demand that is coming in from the utilities. As we saw over the course of the COVID impacted year, the power demand growth was actually flat, more or less. But in the current year, current financial year, we've seen power demand growth at about 5% to 6%. And the expectation is that that will continue over the course of the next year as India's GDP continues to stay robust between this year and next year. And as that demand is getting manifest, clearly the utilities need to buy more power. And that, therefore, is leading to more demand, which is obviously very fundamental to having more bids. In addition, there are new sources of demand coming in. One, of course, is the corporate PPA market, where there is now increasing pressure on corporates, as well as for them, and from their standpoint, a potential cost reduction opportunity by buying renewables directly from people like us. So we're seeing that market growing quite substantially. as well as the carbon market, actually, because there are a number of people who are coming in and looking only to buy the carbon portion. And then, of course, there are two other sources of demand. One is the Indian Railways, which is likely to go net zero by 2030 and consumes almost about 3% to 4% of India's total electricity generation. So that is something that they are also coming to the market now in a fairly big way. And then, of course, the opportunity for green hydrogen, which, as I said in my remarks, the government has now announced a green hydrogen policy and is going to be pushing that rollout quite aggressively. So all of those are going to lead to increased demand. So you'll see probably, therefore, more bids coming up through the course of this year as the backlog of the old projects gets cleared up. And all of that, therefore, will result in significantly increasing everybody's pipelines including our own for commissionings between one and a half to a few years out from this point on. So I think that's how the demand side will develop. It's looking fairly robust at this point in time, and I guess that's good for all of us in the industry. So let me pause there.
Justin Clare
Okay, great. No, that was really helpful. And then I guess if we could shift to just the supply chain here. You know, we've heard about delays in wind turbine manufacturing due to challenges with the supply chain and them not being able to get the materials that they need. So can you just give us a sense for, you know, are you getting your turbines on time and the equipment that you need to keep projects kind of on track here? Or are you seeing potential for delays?
Kailash Vaswani
So, you know, Justin, for the projects that we had to commission this year, we've got all the turbines for those projects. And those, in any case, have to be done literally over the next month or two. So those are all under control. For projects that will be commissioned over the course of the next financial year, those deliveries are still a few months out. And at this point, we haven't, at least our suppliers have not indicated to us any delays on their supply schedules. So, you know, I don't have anything specific to report to you on that front right now. But now that you mentioned it to me, you know, I'll keep an eye on it and, in fact, proactively go and have these conversations. But so far, frankly, we have not heard anything on that front from our suppliers.
Justin
Okay. All right. Good. Yeah. Yeah. Go ahead. No, go ahead.
Kailash Vaswani
No, the only other thing I was saying is that we have pretty diversified supply, you know, of wind turbines coming at us this year from Vestas and Siemens, Gamesa and Envision. So they're not overly dependent on any one of them. And frankly, they have all sort of dialed back on their capacities for India already. And those, I think, are pretty much at least as far as they've indicated to us under control right now.
Justin Clare
Okay, good. And then maybe just one more for me on interest expense here or just interest rates generally. I think you have 29% of your debt is variable rates right now. Just wondering if you're considering fixing those rates and if you have the ability to do so. And then how are you thinking about interest rate risk for projects that you're still – developing or building any way to hedge interest rate risk or any way, you know, how are you thinking about that?
Kailash Vaswani
Yeah, I'll let Kailash answer that question. Yeah. Yeah. Yeah. So Justin, you know, as far as, you know, the variable rate interest loans are concerned, you know, we have, we are working on that actively and we expect that, you know, all of the 27, 28%, at least, you know, 20% would be fixed. in the next 6 to 12 months time period. And what we are also trying to do, wherever we have variables, we are negotiating much lower rates. So we are seeing rates at even below, at around 7% or thereabouts. And then that is actually then giving us the ability to wait out some of the interest rate increase also which happens. So we try to manage rates in that fashion where variable rates are at lower rates, at closer to 7, 7.5. Fixed rates are between 8, 8.5 and then we lock it in and there's that 1% differential which we see more or less. To the second part of the question, as far as projects which are under development is concerned, so again, we are borrowing in some of these projects dollar loans where we hedge the dollar exposure and the interest rate out to five years and that fixes the rate. And the upfront spread that we negotiate is relatively lower. And that gives us the ability to still end up at the same level because the hedging costs also sort of narrow down a bit as interest rates increase. So we're seeing those play out at this point. We are borrowing rupee for financing our project. There again, we are borrowing floating to some extent. And wherever possible, we are also getting fixed rate loans. We are fixing it for the long term. So through that, we're managing. And lastly, I'll say that for our projects which are under development or which we bid in future, we will factor in the interest rates at a higher level. Our long-term rate interest rate assumptions are closer to 8.75% in that range. So that gives us enough, you know, for runway from even now on to absorb any interest rate increases.
Justin
Okay. Great. Thank you.
Kailash Vaswani
I think, Justin, let me just add to that and say that in India, interest rates at this point at least have not really gone up. And as its latest policy meeting, the RBI continued to adopt a fairly dovish tone. And Indian inflation is still within the RBI's, you know, they have a band of 4% to 6%. So it's still within that band, although at the upper end of that range. So our expectation is that Indian interest rates at least will continue to be not increasing very substantially at this point. And so that gives us the opportunity of shifting a little bit more into rupee borrowing. And within that also, as Kailash said, if we do take the risk of variable, we tend to get much lower rates. But as we all recognize, interest rates might trend upwards over the next year or two. And therefore, we are looking to fix a substantial part of even the variable rate borrowing that we have. And all of that is happening at rates of around 8%, which is significantly below our current overall cost of borrowing at 8.9%. So there is still an opportunity for us as we consider fixed rates to bring down our cost of borrowing further down from where we are. And of course, for new projects, as Kailash said, they're already assuming higher rates. And so therefore, we are building that into the tariff. So we will not be for new projects at least being impacted by higher rates going forward because we would have built that into out of dumb expectations calculations. Thanks.
Justin Clare
Okay. I appreciate it. Thank you.
Nathan
Hi Jason. Um, we've had some, yeah, we've had some, uh, online questions that I'll pose, um, from here. Um, when you, when starting with the first one, there's a list of questions here. So, um, Just starting with the first one, can you talk more about the Intelligent Energy Solutions bidding this year, and have we seen new bids with storage coming up?
Kailash Vaswani
Yeah, so there is one bid that the government has announced for storage, and that is a 1,000 megawatt-hour storage bid that should be coming up for bidding fairly soon. There are a number of states also that have announced standalone bids as well. Of course, smaller in size, so we're seeing whether we want to participate in those. But I would say that the market for standalone storage bids is also likely to grow quite substantially. And so apart from bidding for state renewable energy projects, we'll also be bidding for the battery projects. In addition to that, the government has now also announced, by the way, a fairly significant build-out plan for transmission infrastructure. And that is something that we are also interested in looking at because they are very often tied into commissioning of our new renewable energy projects. So having control on the transmission infrastructure becomes fairly useful to have. So we're looking at that as another opportunity. So in terms of intelligent energy solutions also, As I think we may have said earlier, there was a 2.5 gigawatt bid that happened last year that had to be canceled for some bidding issues. That is likely to get tendered out again in the next couple of months' time. So that will be the first bid that will happen. And then, as I said, the Indian Railways is looking at doing their own round-the-clock, the intelligent energy distribution bids as well. So the first tender that they're likely to come up with is going to be at least a gigawatt in size or thereabouts. And keep in mind that each of these intelligent energy solutions requires renewable energy, which is almost three times the capacity of the bid itself, because they all require much higher plant load factors. So a 2.5 gigawatt bid, for example, would require an installation of almost 7 to 8 gigawatts of actual renewable energy capacity of wind and solar. So these are actually therefore fairly large size tenders, and these are all likely to be coming up in the initial few months of the next financial year, let's say Q1 or thereabouts. I suspect that there will be quite a few of these kinds of bids. Plus, green hydrogen also, as I said, will require solutions which also require more stability of power and therefore also will require the guaranteed energy solutions. And as we see more of those requirements coming up, those will all feed into the same combinations of wind and solar and storage to optimize the overall cost. So I think we do believe that there will be quite a... number of such auctions and bids that will be coming up over the course of the next 12 months.
Nathan
And then just if you could follow up with a little bit of color on what you're seeing in the corporate PPA market. We have flagged this as a high return, which makes sense for corporates. It's green and lowers their costs. What are we seeing? Are we seeing more inquiries? And when can we see a material pickup for this market?
Kailash Vaswani
Yeah, we're seeing a lot of inquiries now. And frankly, we've been working on this market for the last two years. And, you know, in the beginning, obviously, the going was quite slow because, you know, it took corporates a little bit of time to understand the regulatory environment and issues and what kind of solutions are possible. And, you know, depending on where the customer is connected in terms of their power supply, you know, different kinds of solutions and depending on the state the regulatory environment, different kinds of solutions have to be structured for them. And then, you know, the selling cycle has been fairly long. But now, as I said, getting to the point where they're beginning to convert more of these PPAs. And Nathan, I'm not sure that you've announced a separate standalone, you know, number for how many corporate PPAs you've signed. So if you haven't, then I won't talk about that right now. But certainly, it's something that we'll probably be coming out with at some point in the near future. in terms of how many megawatts of PPAs we have converted. But certainly we are seeing that the level of inquiries is quite good, and therefore I see that the market is likely to grow more as we go forward. And hopefully over time we'll be able to give some more tangible numbers about that.
Nathan
Thank you, Samant. And just to change tack here and talk about the wind resource study, Can you give us an idea of how the numbers are trending relative to a 20-year timeframe and what's the sensitivity to our EBITDA for every 1% change relative to normal over time?
Kailash Vaswani
Yeah. And Nathan, I presume these are questions from investors as opposed to from you. If you look at the last 20-year analysis for which we have measured actual wind mass data in India, we find that wind speed has decreased from the first decade of the 2010 time period to the second decade of 2010 to 2020. there's been a reduction in wind speed by about 0.9% or about a percent. And that has approximately a 2% impact on the overall generation of wind projects. So, you know, it's sort of within the band of statistical insignificance, actually, this 1% delta, which is why, you know, wind assessment companies don't really tend to factor in a decadal drop in wind data. Now, having said that, we know that the last two years particularly have been worse. And so if I factor in the last two years as well and take the last 20 years, including the last two years, then that drop actually increases from about 0.7, 0.8% to about 1%. And so just a little bit over 1%. So that's really what the overall numbers have been. And because the last two years have particularly... sort of been bad and have caused us to have this significant weather adjustment. That is why we intend to now do a deeper dive into this whole issue. And let me also just tell everybody that the way we do our wind forecast is obviously based on satellite data of the last 30 years. Then we put up wind masks. We measure wind actually for at least a couple of years in that site. We triangulate that against the satellite data and we do our own internal assessment first. Then we go to a third-party wind study company like a DNBGL or an ArcVera or one of these fairly well-known companies that do this globally. And then only we arrive at what the actual number should be. And then, as you all know, as we go for lending, our lenders also hire their own wind measurement company and get the numbers validated. So there are at least two independent third-party companies that tend to look at all of the projects that we have done. And so what we finally end up going with is, I would say, a fairly well-analyzed and fairly well-studied number. It's certainly not something that we just assign a number to ourselves and then we just go with that. Now, having said that, and despite that, and despite the best efforts of everybody, we do know that the last two years have not been as good as the previous several years before that. And that is why, as I mentioned earlier in the call, at the end of this high wind season, which will finish around September, we will use that data. That will give us then three years of data of the last three years, and we will then recommission or rehire these agencies to do a full-fledged study. Now, some of you would also know that globally, also, wind speeds have not been that good. Now, whether this is sort of an aberration or whether this is a long-term trend, I don't think that anybody has a very, very strong sort of handle or view on that. So I think we'll study this, as I said, in more detail. And we'll come to whatever is the best conclusion we can come to. We are not fixated in our view, certainly. We want to be as open and transparent on this issue as possible because we want to arrive at the best answer. And if that merits for us to change our forecasting methodology in any way, we will do that. So, and you know, we'll then make that adjustment because certainly we also don't want to continue to have a certain EBITDA number as a target and then report a weather-adjusted number which is different from that. So we do want the two to get into alignment as we go forward. So we'll put in our best efforts to study this topic in much more detail and arrive at the most scientific and analyzed solution that we can come to.
Nathan
And, Samant, just if I can add to that point as well, if you look at the sensitivity and put that into context, you know, every one percentage point relative to normal is about $10 million ongoing EBITDA. So, you know, when talking about the kind of size and scale of this study, at the end of the day, it's not likely to have a huge impact. on our results, but we'll have to do the study to make sure. Going to DSOs, can you provide some medium-term guidance on DSOs given the changing mix towards central and recent developments around implementing faster payments?
Kailash Vaswani
Yeah, so I can't give a specific, you know, sort of a numerical number, but I will try to give some directional guidance. So as all of you know, as our portfolio shifts more and more towards Secchi as our off-taker, and out of the 10.2 gigawatt portfolio, 50% is with Secchi as the off-taker, our DSOs will naturally tend to trend downwards because Secchi, on our Secchi portfolio, we don't really see any delays at this point in time. And so therefore, there is going to be a structural improvement in our DSOs just on account of that one factor as we go forward. Because clearly, as we go from 10 gigawatts to 15 gigawatts, most of the additional five will be either SECI or corporate off-takers, which both tend to pay on time. The existing capacity that we have directly with state off-takers, which is currently about five gigawatts, that will then become a smaller part of our portfolio, and therefore the overall weighted impact average of that will come down. So that's point number one. The second point is that There are four states in particular that account for the bulk of our receivables, almost about 80% of our receivables. And those are states that we're obviously actively working on right now. We've decided, as we said earlier, to go to court on enforcing the contract that we have with these states for payments on time. And wherever we are going to the courts, the courts are inevitably ruling in our favor. Two such rulings we've already got from the state of Karnataka, and the state of Maharashtra. We're now in a third court in the state of Madhya Pradesh and a fourth state in Telangana, which is one of the other states, also has now been admitted for hearing. So there are all these cases are going on and these cases ultimately, as I said, get ruled in our favor and that does, and the discounts then are instructed to essentially pay us over a period of time. Now, What that leads us to is the fact that the discoms obviously don't have the capacity to pay immediately, although now under court pressure, they will have to. And so therefore, we have to work out a bit of a payment mechanism or a payment timeline with them, which is something that they can then stick to. So that is really what we do after we win the court case. And we have to agree on a certain timeline of payments over a few months so that these people have the ability to make those payments happen. So I think over the course of the next several months, you will see that in the balance states that we don't have such rulings in, we will get those rulings. And then the payments will begin to start. And then hopefully some of the clawback on the existing DSOs will then begin to happen. So I think that is the second aspect. The third is that the central government is also putting pressure on the discounts quite substantially, as I've talked about many times earlier. And they have given a specific exemption to state governments that they will be allowed to borrow more than their usual borrowing limits primarily to fund their discounts. And so between that and preventing access of the discounts to the exchanges, they are trying to essentially persuade the discounts to become more current on their payments. So that is also to some extent helping. And the last point in that I would say is the case of Andhra Pradesh or AP which is a special kind of a case where the case as we all know had been dragging on for a long time. The hearings of the case concluded finally in the High Court earlier this month and we expect that by the end of next month the judge will pass a ruling. Now this is a ruling on a technical matter. That ruling could be appealed further And so it may take a little bit longer before that whole situation comes to a final conclusion. So this is really where we are on the AP situation. And so that is really the whole DSO scenario right now. I would say that structurally we'll have an improvement. In some of the states where there are significant overdues, we'll have court rulings in our favor that would improve our payment situation. and therefore guide the DSOs downwards. In AP as well, I would say that once the ruling comes out, it should be heading towards an expedient resolution after that. Because then from that point on, it will go to the Supreme Court if it is appealed. And there, usually rulings are faster. So I would say that over the course of this year, we'll continue to see, by the end of the year, a significant improvement. But that improvement will probably be gradual and spread out over the course of the next several months.
Nathan
And Samant, as you were answering that question, I just got another one that comes in that's related, and it's just about the risk of renegotiation that is possible given the current environment.
Kailash Vaswani
No, that is not a risk, Nathan, at all in India. None of the DISCOMs is at this point talking about renegotiating any contracts. As I said, the only one that is there is Andhra Pradesh, which has been going on for the last two years. None of the other states has picked up on that or has chosen to take that particular, you know, that same approach forward. And forget renegotiation of contracts, courts are ruling in our favor on late payment. And so, therefore, you know, there's fairly well-established case law on enforcement of these contracts, including the payment. let alone, you know, renegotiation of the tariffs or anything. So I think that's not something that is at all a possibility in the Indian context at this point.
Nathan
And then finally, on the final question, relates to the Electricity Act, which has been pushed out to the winter session in Parliament. And how do you see that play in context of reforms focused on consumer tariffs as well as on the distribution side?
Kailash Vaswani
Yeah, so the Electricity Act actually had a number of positive proposals, including a stronger regulatory environment and so on. The government, I think, has chosen to not push that forward or push that forward in a slightly more watered-down way. But I think at the same time, what they are doing is that they are taking the different elements of the Electricity Act and trying to push that through separately. So, for example, the whole issue of having a national renewable purchase obligation projection, which was earlier being contemplated in the Act, is now something that the government is trying to push separate from the Act. The minister, in fact, in a recent conversation with people from the industry was saying that there would be eventually in the future a national RPO trajectory which would then not give states the luxury or the freedom to have their own trajectory. There would be one central national trajectory that all the states would then have to pursue. So those kinds of things are happening even outside of the Electricity Act. So I think Look, the reality is that the central government is very, very supportive of our sector. They recognize that deeper electrification and the greening and the decarbonization of the electricity sector is absolutely fundamental to meeting our demands, our electricity demands or energy demands in the future in the lowest cost manner possible. It is also consistent with commitments that the Prime Minister made in COP26. And it also is... essentially an opportunity for the country to decrease our energy dependence. We currently, as you would know, import almost $150 billion worth of fossil fuels every year, including coal. We import almost $20 billion worth of coal every year as well. And so this is a way that the government realizes is a way to cut dependence on the fossil fuel import. There is at all branches and levels of the government a very significant push forward for decarbonizing the entire energy value chain in India. So I think that is something that underlies a lot of the actions that the government has been taking in recent months and will continue to take in the future as well.
Nathan
Thank you, Samant. That's the end of our questions. We really appreciate everybody. joining and please feel free to reach out to us. My email is nathan.judge at renewpower.in and really appreciate everybody joining.
Kailash Vaswani
Yeah, thank you everybody.
Operator
That does conclude our conference for today. Thank you for participating. You may now disconnect.
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