Adani Green: This Adani Stock Rallies On 20-Yr Deal With Sri Lanka For Wind Power Stations

Sri Lanka has taken a significant step towards increasing its renewable energy capacity by securing a 20-year power purchase agreement with Adani Green Energy Ltd. The agreement paves the way for the operation of two wind power stations developed by the company.

Adani Green Energy, the renewable energy arm of the Adani Group helmed by billionaire Gautam Adani, received approval in February last year to invest a substantial $442 million in developing wind power plants with a combined capacity of 484 megawatts. These plants are located in Mannar town and Pooneryn village, both situated in Sri Lanka's Northern province.

Under the terms of the agreement, Adani Green Energy will be compensated at a rate of 8.26 cents per kilowatt-hour (kWh) for the electricity generated by the wind power stations. This agreement not only promotes the adoption of renewable energy but also aligns with Sri Lanka's efforts to diversify its energy sources and mitigate the impact of volatile fuel prices on its economy. The Adani Group is also engaged in the construction of a $700 million terminal project at Colombo Port, Sri Lanka's largest port.

This initiative comes at a critical juncture for Sri Lanka, a nation grappling with financial challenges by power shortages and fuel scarcities during the economic turmoil of 2022. By prioritizing renewable energy projects, Sri Lanka aims to reduce its reliance on imported fuels, thereby enhancing energy security and resilience in the face of economic uncertainties.

As of 11 am on the National Stock Exchange (NSE), Adani Green Energy shares were up by more than 1% at Rs 1,749 per share. Over the past year, the stock has soared nearly 95%.

The company recently announced its January-March quarter results for fiscal 2023-24 (Q4FY24), reporting a 70% drop in net profit at Rs 150 crore, compared to Rs 508 crore in the corresponding period last year. Adani Green Energy's revenue from operations in Q4FY24 also witnessed a marginal decline of 2%, amounting to Rs 2,527 crore as opposed to Rs 2,587 crore in the year-ago period.

Despite these figures, the company's operational capacity saw a 35% year-on-year growth, reaching 10,934 MW. This includes the addition of 2,848 MW of renewable capacity, comprising 2,418 MW of solar and 430 MW of wind projects. Notably, Adani Green Energy has become the first and fastest company in India to surpass the 10,000 MW mark in renewable energy capacity.

The company's operational portfolio, now exceeding 10,000 MW, is poised to power more than 5.8 million homes and reduce approximately 21 million tonnes of CO2 emissions annually. Additionally, the sale of energy surged by 47% year-on-year to 21,806 million units in FY24, reflecting strong capacity addition and operational efficiency improvements.

Amit Singh, CEO of Adani Green Energy Ltd, expressed confidence in the company's execution capabilities, highlighting the deployment of 2 GW of renewable capacity at Khavda within just 12 months of breaking ground. Looking ahead, the company aims to commission at least five GW of hydro-pumped storage projects by 2030, contributing towards India's non-fossil fuel capacity target of 500 GW.

In line with its expansion plans, Adani Green Energy has commenced construction on its first hydro-pumped storage project (PSP) of 500 MW in Andhra Pradesh. This project, located at Peddakotla in Sri Sathya Sai district, is expected to generate 500 MW with an estimated 6.2 generation hours per day. All necessary approvals have been obtained, and financial closure has been achieved, signalling progress in the company's diversification efforts.

Despite its positive trajectory, Adani Green Energy faced a regulatory challenge during the quarter, receiving a show cause notice from SEBI regarding the validity of a peer review certificate from a joint auditor in previous financial years. However, the company maintains that the matter is technical and has no material consequential effects.