Azure Power Announces Results for Fiscal Second Quarter 2022

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Azure Power Global Limited, a leading independent renewable power producer in India, today announced its consolidated results under United States Generally Accepted Accounting Principles (“GAAP”) for the fiscal second quarter 2022, period ended September 30, 2021.

Fiscal Second Quarter 2022 Period ended September 30, 2021 Operating Highlights:

  1. Megawatts (“MW”) Operating* were 2,210 MWs, as of September 30, 2021, an increase of 31% over September 30, 2020. Operating, Contracted & Awarded MWs* were 6,955 MWs, as of September 30, 2021. Contracted & Awarded megawatts included 4,000 MWs for which we had received Letters of Award (“LOA”) but the Power Purchase Agreements (“PPAs”) had not been signed as of September 30, 2021. Subsequent to the quarter end, we have signed PPAs for 600 MWs with SECI in relation to the 4,000 MW project, refer the detailed explanation in the key operating Metrices section below.
  2. Operating revenues for the quarter ended September 30, 2021 were INR 4,386 million (US$ 59.1 million), an increase of 25% over the quarter ended September 30, 2020.
  3. Net loss for the quarter ended September 30, 2021 was INR 300 million (US$ 4.0 million) against the net loss of INR 368 million for the quarter ended September 30, 2020. The decline in Net loss was primarily due to additional revenue from sale of carbon credits and reversal of stock appreciation rights (SARs) expense, offset by increase in legal and professional expense and tax expense, refer the detailed explanation in the Net loss/ (profit) section below.
  4. Adjusted EBITDA for the quarter ended September 30, 2021 was INR 3,685 million (US$ 49.8 million), an increase of 59% over the quarter ended September 30, 2020. The increase was primarily due to additional revenue from new projects,  sale of carbon credits and reversal of stock appreciation rights (SARs) expense, partially offset by increase in legal and professional expense, during the quarter ended September 30, 2021.
  5. Non-GAAP Cash Flow to Equity (“CFe”) from operating assets for the quarter ended September 30, 2021 was INR 1,406 million (US$ 18.9 million), an increase of 32% over the quarter ended September 30, 2020. The increase was primarily due to additional revenue from sale of carbon credits and lower interest cost relating to existing operational projects due to refinancing.

*Megawatts Operating and Megawatt Operating, Contracted & Awarded exclude the Rooftop portfolio, for which we entered into an agreement to sell in April 2021. We excluded 153 MWs from our Operating, Contracted & Awarded portfolio as of September 30, 2021, and the prior comparative period. We excluded 153 MWs from our Operating portfolio as of September 30, 2021, and 144 MWs from prior comparable period. The exclusion from prior period is for the purpose of comparison with current period, however we continue to consolidate these assets.

Key Operating Metrics

Electricity generation during the quarter and six-months ended September 30, 2021 was 1,001 million kWh and 2,113 million kWH, respectively, an increase of 231 million kWh or 30%, over the quarter ended September 30, 2020, and an increase of 460 million kWH or 28%, over the six months ended September 30, 2020. The increase in electricity generation was principally a result of an additional 529 MWs of AC (728 MWs DC) operating capacity, including our Rooftop portfolio commissioned since September 30, 2020.

Our Plant Load Factor (“PLF”) for the quarter and six month ended September 30, 2021, was 20.2% and 21.9%, compared to 18.8% and 20.8%, respectively, for the same comparable periods in 2020, which increased principally due to the addition of AC and DC capacity and improved performance by our plants, including Rooftop portfolio. Our Plant Load Factor (“PLF”), excluding rooftop portfolio, for the quarter and six month ended September 30, 2021, was 21.1% and 22.9% respectively.               

We commissioned 158 MWs AC (188 MWs DC) during the three months ended September 30, 2021 and 220 MWs AC (252 MWs DC) during the six months ended September 30, 2021 against 25 MWs AC (25 MWs DC) during the comparative three months and 26 MWs AC (28 MWs DC) during the six months ended September 30, 2020.         

Project cost per megawatt operating (megawatt capacity per the PPA or AC) consists of costs incurred for one megawatt of newly commissioned solar power plant capacity during the reporting period. The project cost per megawatt (DC) operating for the six months ended September 30, 2021 remains same as for comparative period i.e. INR 34.7 million (US$ 0.47 million). The project cost per megawatt (AC) operating for the six months ended September 30, 2021 was INR 39.6 million (US$ 0.53 million), compared to INR 40.4 million, for the six months ended September 30, 2020. Excluding the impact of safeguard duties, the DC and the AC costs per megawatt for the six months ended September 30, 2021 would have been lower by approximately INR 2.9 million (US$ 0.04 million) and INR 3.3 million (US$ 0.04 million), respectively, and for the six months ended September 30, 2020, the DC and the AC costs per megawatt would have been lower by approximately INR 1.3 million and INR 1.3 million, respectively.

As of September 30, 2021, our Operating, Contracted & Awarded megawatts were 6,955 MWs. There was no change compared to prior comparable period, other than to reflect the disposal of the Rooftop Portfolio. Contracted & Awarded megawatts included 4,000 MWs for which we had received LOAs but the PPAs had not been signed as of September 30, 2021. Subsequent to the quarter, the Company has also received letter of awards (LOA), for its first 120 MWs wind project and first 150 MWs solar – wind hybrid project, from Solar Energy Corporation of India (SECI)

Subsequent to the quarter end, we have signed PPAs for 600 MWs with SECI at a fixed tariff of INR 2.54 per kWh for supply power for 25 years, as a part of 4,000 MW manufacturing linked projects.

Megawatts Operating and Megawatts Contracted & Awarded

We measure the rated capacity of our plants in megawatts. Rated capacity is the expected maximum output that a solar power plant can produce without exceeding its design limits. We believe that tracking the growth in aggregate megawatt rated capacity is a measure of the growth rate of our business.

“Megawatts Operating” represents the aggregate cumulative megawatt rated capacity of solar power plants that are commissioned and operational as of the reporting date.

Megawatts Contracted & Awarded represents the aggregate megawatt rated capacity of solar power plants pursuant to customer PPAs signed, allotted or won in an auction but not commissioned and operational as of the reporting date.

Nominal Contracted Payments for Projects with PPAs

Our PPAs create long-term recurring customer payments. Nominal contracted payments equal the sum of the estimated payments that the customer is likely to make, subject to discounts or rebates, over the remaining term of the PPAs. When calculating nominal contracted payments, we include those PPAs for projects that are Operating, Contracted & Awarded, unless specified.

* Nominal contracted payments include projects for 600 MWs which amounts to INR 98,937 million (US$1.3 billion), for which PPAs are signed subsequent to quarter end in relation to 4,000 MWs project with SECI.

The increase in Nominal Contracted Payments and total estimated energy output as of September 30, 2021, as compared to September 30, 2020, is due to inclusion of 600 MWs for which PPAs are signed subsequent to quarter end, partially offset by exclusion of our rooftop portfolio, which we have agreed to sell during the current period and the impact of current period revenue realised.

Our nominal contracted payments are not impacted for the delays in construction due to COVID-19, as revenues from our PPAs start on the date of commissioning of the project.

Portfolio Revenue Run-Rate for Projects with PPAs

Portfolio revenue run-rate for projects with PPAs equals annualized payments from customers extrapolated based on the Operating, Contracted & Awarded capacity as of the reporting dates. In estimating the portfolio revenue run-rate, we multiply the PPA contract per kilowatt hour by the estimated annual energy output for all Operating, Contracted & Awarded solar projects as of the reporting date. The estimated annual energy output of our solar projects is calculated using power generation simulation software and validated by independent engineering firms. The main assumption used in the calculation is the project location, which enables the software to derive the estimated annual energy output from certain meteorological data, including the temperature and solar insolation based on the project location.

* Portfolio revenue run-rate include projects for 600 MWs which amounts to INR 4,198 million (US$56.6 million), for which PPAs are signed subsequent to quarter end in relation to 4,000 MWs project with SECI.

The increase in portfolio revenue run-rate as of September 30, 2021, as compared to September 30, 2020, is primarily due to inclusion of 600 MWs for which PPAs are signed subsequent to quarter end, partially offset by the exclusion of our rooftop portfolio, which we have agreed to sell during the current period.

Fiscal Second Quarter 2022 Period ended September 30, 2021 Consolidated Financial Results:

Operating Revenues

Operating revenues for the quarter ended September 30, 2021 were INR 4,386 million (US$ 59.1 million), an increase of 25% from INR 3,504 million in the quarter ended September 30, 2020. This increase was mainly driven by revenue generated from projects which were commissioned after the quarter ended September 30, 2020 and additional revenue of INR 408 million (US$ 5.5 million) from sale of carbon credits, to the extent where revenue recognition criteria’s are met. Further the operating revenue for quarter ended September 30, 2021 includes INR 166 million (US$ 2.2 million) relating to Rooftop Portfolio of 153 MWs (AC), for which Company has entered into an agreement to sell during April 2021.

Cost of Operations (Exclusive of Depreciation and Amortization)        

Cost of operations for the quarter ended September 31, 2021 increased by 15% to INR 355 million (US$ 4.8 million) from INR 309 million in the quarter ended September 30, 2020. The increase in the cost of operations was primarily due to increase in operational expenses from project commissioned after the quarter ended September 30, 2020.

The cost of operations per megawatt during the quarter ended September 30, 2021 decreased marginally to INR 0.15 million (~US$ 2,100), from INR 0.16 million (~US$ 2,200) in the same comparable period ended September 30, 2020.

Liquidity Position

As of September 30, 2021, we had INR 9,513 million (US$ 128.3 million) of cash, cash equivalents. In addition, we had INR 9,780 million (US$ 131.9 million) of short-term restricted cash as at September 30, 2021 that we expect to be utilised primarily for capital expenditures over the next twelve months. We had undrawn project debt commitments excluding Rooftop portfolio of INR 17,803 million (US$ 240.1 million) as of September 30, 2021.

Adjusted EBITDA

Adjusted EBITDA is a Non-GAAP metric, please refer to the reconciliation of Net (loss)/ Profit to Adjusted EBITDA in this document.

Adjusted EBITDA was INR 3,685 million (US$ 49.8 million) for the quarter ended September 30, 2021, compared to INR 2,312 million for the quarter ended September 30, 2020. The increase was primarily due to projects which were commissioned after the quarter ended September 30, 2020, incremental revenue from sale of carbon credits amounting INR 408 million (US$ 5.5 million) and reversal of stock appreciation rights (SARs) expense amounting INR 242 million (US$ 3.3 million), offset by increase in legal and professional expenses by INR 177 million (US$ 2.4 million). The EBITDA includes INR 284 million (US$ 3.8 million) related to Rooftop portfolio of 153 MWs (AC), for which Company has entered into an agreement to sell during April 2021.

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