Renew Energy Global PLC (RNW) Q1 2023 Earnings Call Transcript

Renew Energy Global PLC  (NASDAQ: RNW) Q1 2023 earnings call dated Aug. 19, 2022

Corporate Participants:

Nathan Judge — Head of Investor Relations

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Kedar Upadhye — Chief Financial Officer

Vaishali Nigam Sinha — Chief Sustainability Officer

Analysts:

Kody Clark — Bank of America Securities — Analyst

Justin Clare — ROTH Capital Partners — Analyst

Presentation:

Operator

Thank you for standing by, and welcome to the ReNew Energy First Quarter 2023 Earnings Call. [Operator Instructions] There will be a presentation followed by a question-and-answer session. [Operator Instructions].

I would now like to hand the conference over to Mr. Nathan Judge, TBC [Phonetic]. Please go ahead.

Nathan Judge — Head of Investor Relations

Yeah. Thank you very much, Jason. And I’m Nath, TBC Head of Investor Relations. Thank you very much and good morning everyone, and thank you for joining us. Last night the Company has issued a press release announcing our results for the first fiscal quarter of 2023 ended June 30, 2022. 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 Sumant Sinha, our Founder, Chairman and CEO; Kedar Upadhye, our CFO; and Vaishali Nigam Sinha, our Chief Sustainability Officer. Sumant will start the call by going through an overview of the Company and recent key highlights and then Kedar will go through the results followed by an update on ESG from Vaishali. We will then wrap up the call with some Sumant reiterating our guidance for fiscal year 2023. 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 you to review the press release we furnished in our Form 6-K 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 Sumant.

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Yeah. Thank you, Nathan, and good morning to everybody on the call. Let me dive right into the presentation. Starting on Page 5, we are pleased to deliver a strong set of results above our internal budget for the first fiscal quarter of 2023. And we are on track to meet out FY’23 guidance so far this year. Revenues and adjusted EBITDA were up about 50% year-on-year and our cash flow to equity or the equivalent to distributable cash flow more than doubled versus the same quarter last year.

Our portfolio grew to 13.2 gigawatts or 33% up from the prior year. And importantly, nearly 95% of the portfolio has PPA now, providing therefore greater confidence in our growth. Nearly all of our forecast of fiscal year ’23 adjusted EBITDA should come from operating assets, currently operating, giving us confidence that we are on track. Overall, the growth environment remains bullish as renewables are the lowest cost options for new power capacity in India, and we believe that this is really sustainable. Increasingly our customers are seeking complex power solution, that can be delivered consistently over the full day and we have built this expertise by offering a full suite of renewable products overlaid with digitalization and the proprietary AI technology.

We believe that this is a truly differentiated offering in the renewable sector. Given the lead for electricity to be delivered round the clock, we have seen increased interest in our intelligent energy solutions. We expect in the near future, about 10 to 12 gigawatts of RTC auctions will occur over the next several months, and there is over 100 gigawatt opportunity by 2030. Importantly, please keep in mind that 1 megawatt of RTC power actually requires up to 3 megawatts of renewable energy power. The higher return corporate PP opportunity is really gaining momentum. And we are seeing a very significant acceleration of interest from corporates now, given the economic advantage of a lower price and alternative and an increased focus on sourcing energy from green sources towards corporates in their own net-zero journey.

Today, corporate PPAs represents about 10% of our portfolio — of our total portfolio of 13.3 gigawatts, up from about 4% a year ago. And this area has represented about 30% of all portfolio additions during the last 12 months. We believe that this growth will continue and potentially could even accelerate over the near term. Our intelligent energy solution has significant potential beyond just a traditional utility customer base and we are seeing tremendous interest in both the corporate market and also globally now on the green hydrogen space. Talking about the global green hydrogen opportunities, this is a multi-billion dollar opportunity, but it is still very early in the development process. And any contract and material capital commitment are likely still some time away.

We will only proceed the making investments if the opportunity clears a very stringent set of requirements including returns over our cost of capital and payment security. As far as green hydrogen is concerned we don’t see meaningful capital or investment into this area in the near term.

Turning to Page 6, we have a very strong cash position of approximately $850 million and expect that after the capex for completing our portfolio of 13.2 gigawatt has been spent, we will still end up with a higher cash balance than today. We have no intention of issuing new shares in our current plan and capital recycling provides additional resilience in our balance sheet. In just the past 18 months we have raised about $450 million of equity from capital recycling, and interest in our assets is even stronger today.

The lending environment for our renewable energy project remains robust and we continue to see rates hold at historically attractive levels domestically. We just put in place a $1 billion facility for our round the clock power projects, which compares favorably to the current interest rate of debt on our balance sheet. We also refinanced about $600 million in the latest quarter, reducing our annual interest expense on those debts by about $12 million, and extended the maturity by approximately three years as well.

We have already pre-funded about 80% of debt maturing in the next two years and the remaining $140 million should easily be refinanced and is also amply covered by internal accruals, as well as the and $850 million of cash on our balance sheet currently. Even if the refinancing market unexpectedly closes, which we certainly do not expect it to at this point in time. As we’ve highlighted many times over the past year we have been focused on improving collections on the past two receivables from the state distribution companies. And we are pleased to announce that we have made progress in this regard, and have reached an agreement on payment schedules from several state in the past couple of months of sales. The AP Discom, which as you would know represents almost 42% of our current partners receivables has now agreed to pay what is past view until June ’22, next 12 months in equal monthly instalments. And I’m pleased to say that they’ve already paid the first instalment of that. This is a significant positive development.

We’ve also just received a favorable order from the regulator in Telangana. The Central Government has also ramped up pressure on the state to a series of measures to ensure quicker clearance of outstanding dues. So for all these reasons, we do expect an improvement in our DSOs by year-end.

Turning back to the corporate PPA market on Page 7. As I mentioned earlier, this market continues to gather momentum and we want to spend some time on this, given how important the segment has become to our growth and to our ability to consistently deliver returns above our cost of capital and above our peers. We view the corporate PPA addressable market as around 25 gigawatts today, although the total consumption of — by corporates in India is over 100 gigawatts. In India corporate customers stay about between INR6 to INR10 per kilowatt hour to buy power from the grid, which is significantly higher than what — when that is what is paid by residential customers. The price to buy power from the power exchanges is also around the same level.

ReNew is able to provide power through the same customers, at around INR3.5 per kilowatt hour, which is as you would imagine the significantly better for the corporates and other alternative. On top of this very strong economic initiatives, there is an increased focus by corporates globally, to source that energy from sustainable sources and move towards net-zero carbon emissions goals. As many large companies are able to source low cost carbon credits from India, to offset their emissions, they’re seeing a significant amount of interest for our India renewable energy projects from non-India based companies as well. The regulation is also changing to reduce surcharges and penalty on purchasing power from renewable energy project sites [Phonetic] and from discounts. One item that we are paying particular attention to is a transmission cost favor from renewable energy to corporate. And if this is ratified by the central regulator, it will make the delivered cost of renewable energy even more attractive.

At the end of the quarter as seen on Page 8, the business segment represented about 10% of our portfolio, up from 4% of our portfolio a year ago. We see the potential for corporate PPAs to eventually get to 25% of all portfolio of growth for the next several years. Our optimism also stems from our competitive advantage in this sector.

When you have considerable market share leadership in this segment, as we are able to provide value-added customized solutions to our technological advantages as seen on Page 9. On top of this, the need for companies to partner with renewable energy developers such as ReNew needs that corporate governance is a significant focus by the highest quality corporate customers, our target audience. All of our largest competitors in the corporate PPA market are private companies. Another critical differentiator that ReNew has is the ability to pre-build projects to accelerate the selling cycle. Historically, corporate customers don’t like to wait too long to start receiving electricity, which is where ReNew scores over its competitors in being able to provide customized solutions far more quickly.

Given our scale pre-building corporate projects presents only a nominal amount of our total portfolio, where it could be much higher for a number of our competitors in this market. Corporate PPA has also higher returns in Vanilla [Phonetic] projects, that most of our competitors focus on. And as we all know corporate customers also have a history of paying the bills on time and so our DSOs from this segment are actually fairly low, less than 1% of our total accounts receivable, even though they represent about 8% of our total operating capacity.

As the corporate PPA market grows organically or as corporates grew organically, we will grow along with them, offering us higher long-term organic growth. In addition to that, we believe that there are additional opportunities to enhance growth by cross-selling and offering customized products to our customers. ReNew can also show that we have a strong liquidity position. The chart on the right shows that after all capex and debt maturities are paid over the next several years, we should end up with even more cash in our balance sheet than we have currently, and this without issuing any new share.

We believe that is limited risk to our capex budget at this point and we have considered current prices and providing our capex guidance. Even if margin prices were to rise even by up to 10% from today’s levels, our capex would not the more than 3% to 4%. Most of our wind turbine projects are already locked in and so therefore there is no material exposure on this front. As far as individual problems are concerned for the future, we conclude a target 16% to 20% equity IRR and we will continue to remain disciplined with your capital.

We also have a higher level of visibility for our debt funding. About 50% of all our debt needs for the next couple of years, as already been either sanctioned or approved. We are seeing strong indications of interest for the projects that we haven’t yet raised debt for. Our interest rate risk is also limited with fixed rates on 74% of our debt and a 100 basis points being the only impact for FY’23 cash flow to equity by around 2%.

On top of all of this is the opportunity to utilize capital recycling to enhance the resilience of our balance sheet and ensure ample liquidity, which brings us in fact to Page 11. We have a strong track record of having raised capital through capital recycling. We’ve raised almost $0.5 billion in the last 18 months by selling minority stakes or in some cases entire projects. Going forward, we continue to see a lot of interest in our assets at basically nine to 10 times, EV to run rate EBITDA. And given the fact that we are also sharing at about 7.6 times run rate EBITDA for our 13.2 gigawatt portfolio, this prevents a significant arbitrage opportunity, given also that we have $150 million of authorization left on our share buyback.

Turning to Page 12, DSOs were about 232 days at the end of fiscal quarter 2023, which was about 30-day improvement from the same quarter in the prior year. Our DSOs are seasonal and so there is an uptick in quarter one and quarter two. But we do expect that by the end of the fiscal year our DSOs will be significantly lower than where we are right now. In addition to that, we are also now as I said earlier moving more and more to SECI and to corporate PPAs. In fact of our 13.2 gigawatt total asset base, the total amount from Discoms will only be about 34%. And that itself — that shift from 53% to 34% of Discoms comes in our total portfolio itself would reduce and lead to an improvement in our DSOs by 55 days from where we are right now.

Let me turn it over to Kedar. But before that let me also just point out that most of our leadership team has been here from the beginning, of the Indian renewable sector and we have lived through many ups and downs. We have a lot of operational expertise and capability and this does provide a significant competitive advantages. We believe that building a platform such as ReNew can’t be easily replicated in an emerging market. You need strong operational experience to have the sustainable business in Indian renewables.

With this, let me turn it over to Kedar. Kedar, over to you.

Kedar Upadhye — Chief Financial Officer

Thank you, Sumant. Looking at Page 14, which provides the highlights of the first fiscal quarter of 2023. We added about 57 megawatts this quarter, to bring the total to 7.6 gigawatts operating. The 528-megawatt acquisition is in advance stage of closing and adding this would bring us to 8.1 gigawatts operating. We signed about 341megawatts of PPAs since our last earnings call. Our first quarter FY’23 revenues, which we call as total income under IFRS, rose 50% year-on-year. Our adjusted EBIT also increased at a similar rate and cash flow to equity more than doubled from last year.

Turning to Page 15 which provides a reconciliation of adjusted EBITDA. It was above our internal expectations and it puts us on track to meet our full year guidance at this point of time.

Turning to Slide 16, which highlights our financing and refinancing initiatives. In first quarter we refinanced about $600 million of high-cost debt at an interest rate which was 8.2% or about 200 basis points lower than the previous interest rate on that debt. And it offers us about $12 million annually of cash [Indecipherable]. Regarding interest expense this quarter, there are several one-time items that hit this quarter, which was related to this refinancing. We expect that going forward the interest expense for the current loan book will be around INR12 billion in 2Q onwards.

We have about my $900 billion of debt maturing in the next two years, of which more than 80% has already been pre-funded. We expect the market will be open to allow us to refinance the remaining portion but — isn’t an option our cash flow generation or the approximate $850 million of cash we have on our balance sheet should more than cover this requirement. It is worth noting that inflation in India is under control and well below levels seen in the U.S. Long-term interest rates in India are more competitive than what is generally seen globally. We have meaningfully — we are meaningful additional borrowings, dry powder available and we believe we can fund all our growth in our current plan domestically itself.

When our net debt-to-EBITDA ratios have viewed on a historical 12-month basis, the ratios are distorted as the project date is added during construction phase [Indecipherable] generate for another 18 months or so. We believe that investors should look at our debt levels on a normalized run rate basis. And for 13.2 gigawatts our leverage would be around 5.1x net debt to run rate EBITDA.

With that I will turn it over to Vaishali to update everyone on our ESG initiatives. Thank you.

Vaishali Nigam Sinha — Chief Sustainability Officer

Thanks, Kedar. If we could go to Slide 18. During the first quarter of this financial year, we have continued with the momentum and rigor around our ESG and sustainability initiatives. From a governance standpoint, we have formalized two new policies on human rights for our operations and the sustainability code of conduct for our suppliers. Both these policies are available on our website. The supplier code of conduct is now being rolled out with the view of derisking our supply chain and also to support us in our decarbonization journey. We are working with the business teams to roll it out through vendor interaction and making it a part of the contracts we sign going forward.

From the view of integrating sustainability further in our operations, we have scaled up our efforts around water management and implemented robotic cleaning further, for solar units which has resulted in a net saving of 216,533 kiloliters for this financial year. We have also improved sustainability disclosure significantly and have disclosed our Scope 3 greenhouse gas emissions for the first time across all applicable category. We have also continued our engagement on climate action globally and we were the only Indian representative at the Steering Committee of the recently held Sydney Energy Forum, which is organized by the Australian government, led by the Prime Minister of Australia.

ReNew has always been a responsible citizen, and what we believe is that the ultimate purpose of any organization is to create shared value and positive impact to the society. So recognizing this as we have presented in Slide 19, that climate change has a disproportionate impact on women and youth and our social programs are designed to address these issues. And we have two segments to address these issues. One is — and all of this by looking at it in the climate lens.

So let me talk about a few of our efforts which we have undertaken recently. One is, in our Lighting Lives program. Lighting Lives is a program where we electrify schools with less than three hours of electricity using solar offering. Till date we have electrified 84 schools pan India and established 25 digital learning centers, positively impacting the lives of children who live around in these areas. We have also recently signed a long-term partnership with HSBC, a global financial institution to electrify 74 more schools in and around the areas of operation. Hence, scaling up this program significantly.

Community-based water management is also on top of our priority and in regions around Rajasthan and Gujarat, we are relying on local knowledge to conserve water to traditional rainwater harvesting methods. We de-silted six lakes, constructed 100 tanks and excavated 18 water ponds across these regions to provide access to drinking water to these communities. Women for climate is an extremely important part of our social engagement work we do in our communities. We have two sets of programs, one for the rural women and one for the urban women. In partnership with UNEP, which is the United Nations Environment Program, we are skilling traditional women, poor farmers in Gujarat, as renewable technicians. So we are re-skilling them to become renewable technicians from small time workers. And also as we do that, we are helping them improve their earnings capacity as well. Our goal is to provide training to about a 1,000 women by 2025.

The other program is in partnership with UNEP and IIT Delhi, where we mentoring women led climate start-ups, and we have a cohort of six entrepreneurs, we are mentoring and they’ll be finishing the program in the next month. We have also initiated clean cooking initiative in Madhya Pradesh, our target is to impact 10,000 families by providing them with clean cooking stoves, which will help them reduce their emissions and cooking time and increase their productivity and of course have a hugely positive impact on their health of women who cook in these homes. This project has a potential to mitigate 30 million tons of carbon emissions per year.

I will now turn it back to Sumant for guidance and closing remarks.

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Yeah. Thank you, Vaishali for that. So far through this point in the year we are on track to meet our guidance which is outlined on Slide 22. Our FY’23 EBITDA guidance is for more than 20% EBITDA growth above FY’22 which now translates into between INR66 billion and INR69 billion, or INR156 to INR153 per share. Of this FY’23 guidance we have already achieved about 20% in the first quarter of the year.

Our cash flow to equity guidance is INR21 billion to INR23 billion or INR50 to INR54 per share. As an update on our share repurchase program, we see considerable value in our share, with a 12% cash flow to equity yields on our current portfolio. It also trades at a meaningful discount to what we can sell assets for. As I shared among the highest return investments of scale, we can make, we have been actively buying back stock when we believe they would provide the highest return opportunity. We have repurchased about 12 million shares so far, since we implemented the buyback, which leaves us with well over $50 million of authorization remaining for the program.

One other item that I would like to mention is that in about a week it would be one year since our listing, which should allow us to implement some initiatives near term that should help further distance us from the SPAC monitor [Phonetic] that has hindered the stocks attractiveness to a broader investment audience. We are clearly not a typical SPAC, but we were hampered on what we could do to address this overhang until the annualization of the listing.

With that, we will be happy to take any questions. Thank you.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Julien Dumoulin-Smith from Bank of America. Please go ahead.

Kody Clark — Bank of America Securities — Analyst

Hi. It’s actually Kody Clark. Thanks for taking my question. So first wondering if you can update on how you’re tracking against your plans for solar manufacturing expansion? And also if you can give us an update around the PLI, if any?

Kedar Upadhye — Chief Financial Officer

Yes. Sumant, why don’t you go ahead and take that?

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Yeah. Sure. Julian [Phonetic], hi. Thanks for the question. Look our solar manufacturing plant are on track. We expect to get the first set of modules to be coming out by very early next year. And the cell plant should be up and running by around middle of next year. So, I think that is more or less on track. And your second question was?

Kody Clark — Bank of America Securities — Analyst

Just around the PLI, if there is any update there, that you…

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Yeah. Sorry. On the PLI scheme, the government has been essentially trying to formulate a new PLI scheme, which is now with the government, at some stage of approval. The expectation is that it will come out fairly soon, and then we’ll have to bid again for — see if you can get any allocation under that, as would everybody else for that matter. So we are waiting for the final details of the scheme to come out and for the final approval to come through. And as I said, that should all — to my mind it should all happen in the next maybe three months or so.

Kody Clark — Bank of America Securities — Analyst

Okay, understood. Thanks for the update around the corporate PPA side. Curious if you can talk a little bit about the differences in returns and risk profile for rebuilding projects versus waiting for a signed contract. I would assume maybe higher financing costs offset by the market prices for electricity in the frontiers. But am I — you can interpret [Phonetic] this correctly?

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Yes, Julien, there is not really a significant gap on pre-building — and as say, pre-building, it doesn’t mean that we start necessarily putting up wind turbine. What it does mean is that, we do fairly proactive project development. And so make sure that we get the sites to a point where we can then start deploying the wind turbines of the solar modules fairly quickly. The longest lead time in Indian project execution is not the actual construction at side but getting the site ready and that takes relatively less capital. But as I said, does end up taking more time. And so that’s the part of the equation that we tend to work on a little bit more proactively. Now it helps us very significantly because in a number of cases corporates want solutions quickly. And if we are in a position where we have already done a lot of the project development work, we can actually provide the solutions then fairly quickly, rather than starting the process and then staying in order to take a couple of years and so on.

And we are able to do that, Julien, because we have a number of conversations happening with many corporates on the PPA side. And so therefore we know broadly speaking, where these projects are required to be put up or where new capacity is required. And that allows us to do project development on a fairly targeted basis and ensure that there is a very, very strong likelihood of offtake. For example, we haven’t had any issue yet where we build something or we’ve gone very far and we haven’t found the customer after that. And that is unlikely to happen as well.

As far as the riskiness of the corporate market is concerned, in general, as we said earlier, DSO is obviously in the corporate market are very, very low and they all pay on time. And there is an opportunity to grow organically along with a number of our corporates, because obviously corporate India is growing and expanding and their power [Indecipherable] are increasing as well. So once we have a customer then is relatively easy to continue to work with them and to grow along with them. And then once you get into the solutioning conversation with them, then it’s easier to continue and then convert a lot of the customers. So it’s really a much more attractive market, which we are able to capitalize on quite substantially.

Kody Clark — Bank of America Securities — Analyst

Okay. Understood. That’s very helpful. Thanks so much for the time.

Operator

[Operator Instructions] And our next question comes from Justin Clare from ROTH Capital Partners. Please go ahead.

Justin Clare — ROTH Capital Partners — Analyst

Hi. Thanks for taking our questions.

Nathan Judge — Head of Investor Relations

Thank you, Justin.

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Hi, Justin.

Justin Clare — ROTH Capital Partners — Analyst

Hi. In the first-off in the annual guide here, I believe that you had previously assumed a $40 million to $60 million negative impact or potential negative impact from a lower wind resource. If you just wanted to see what was your experience in fiscal Q1 in terms of the wind speeds that were experienced relative to historical averages, it looks like things have improved meaningfully from previous quarters here. And then could you talk about kind of what you’ve seen in terms of wind speeds so far in Q2?

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Kedar, what don’t I turn that over to you? And you much be able to further [Speech Overlap]

Kedar Upadhye — Chief Financial Officer

Okay. No, no that’s true. I think roughly the same amount of weather adjustment was factored in our annual guidance. Fortunately, for the first quarter, we have not seen very significant impact. And we’ll have to see how this — the current ongoing quarter goes, there is a little bit of a softening of the wind speeds. But it’s too early for us to change anything at this point of time. But first quarter especially considering May month which was highly productive, we were not impacted by lower wind speeds.

Justin Clare — ROTH Capital Partners — Analyst

Got it. Okay, that’s helpful. And then just on the module supply, I know you’re bringing online your own manufacturing here, but can you just give us a sense for the current availability of solar modules and how confident you are that you’re going to have the supply needed for your near-term projects? And then just curious when you actually do bring the manufacturing online, can you talk about the costs that you’re expecting for your in-house supply versus at least where module prices are today?

Kedar Upadhye — Chief Financial Officer

Yeah. [Speech Overlap]

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Sorry. Go ahead, Kedar.

Kedar Upadhye — Chief Financial Officer

No, no, what I was just saying is, when we start consuming our own captive manufactured solar panels, the way it impacts our P&L is compared to the procured cost of solar panels, which get capitalized. Instead of that, the captive cost gets replaced with that. So in terms of the change you will see in the P&L, that will be nominal. And we are still in the stage two, get to the exact levels of the efficiency.

I think the captive [Phonetic] manufacturing is a great lever for us to build supply certainty, given what we are seeing a supply chain risk. And more importantly, the 40% custom duty which Indian government has placed for imports. So I think it’s a lever for us more to build supply certainty, avoid high value custom duty and we hope it pays out over the long-run. So that’s the answer to your second question.

On the first question, I think our arrangements for wind turbines and modules for the next few quarters are more or less done. But I’ll request Sumant to give a perspective on this please.

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Thank you. Yeah. Justin, as far as the cost of own modules are concerned, compared to what would then be the alternative, which is the imported modules plus the 40%. In some ways, while it’s — while you might want to look at from a cost standpoint, keep in mind that it’s not even that it’s really just a question of getting modules. Because of the other issue around the approved list of models and manufacturers, where no overseas company has yet approved, it will be impossible to even import modules. So it’s just — it’s a question of even getting access to modules, [Indecipherable] cost issue actually.

The second thing is that, the only modules available would be whatever is manufactured in India by anybody else. And our belief is, that on our understanding based on looking at the market is that the total amount of manufacturing capacity available for modules of really high efficiency, latest sort of technology modules is not going to be more than 5 or 6 gigawatts through next year, it will take time for that capacity to be set up. And so it’s going to be an issue of actually getting access to modules and therefore having our own supply becomes absolutely critical, for begin to able to deliver the projects that we have and for delivering growth. And that is really, the cost of that is what we factored into our current capex estimates.

Justin Clare — ROTH Capital Partners — Analyst

Okay. Got it. And then I guess, just wanted to follow-up on that. How are you feeling about your capacity that you have planned for your module and cell facilities here? Are you comfortable with the current amounts or could you look to expand? And then also, I think you’re primarily just looking at using all of the module supply internally, but could you look to cell modules to external customers at some point here?

Sumant Sinha — Founder, Chairman and Chief Executive Officer

So, Justin, at this point right now, we’ve talked about 6 gigawatts of modules which we are now putting up and 2 gigawatts of cells. Eventually our aim is to have a balanced cell and module facility. We are going a little bit slower on the cell side because we wanted to get the first 2 gigawatts up and running. It’s a little bit more complex than setting up a module plant is. And so therefore we wanted to get far advanced on the first 2 gigawatt, before we start setting up the balance amount. But that is something that we will be looking at during — at some point over the course of the next several months.

Now as far as the question of what we will be doing in terms of selling to other customers and all, that’s not something that we’re contemplating at this point, Justin. Simply because the total amount that we would be producing, will essentially as we’ve talked about in the past will be enough to do projects of about 3 to 3.5 gigawatts which is really what we expect to be producing, to be setting up ourselves. So we don’t really expect to have capacity available for third-party sales in the near future.

Of course, having said that, the reality is, the market is dynamic and we look to see what is happening. But at this point in time, we’re going in hypothesis that we will be supplying to ourselves.

Justin Clare — ROTH Capital Partners — Analyst

Got it. Okay. And then maybe just one more. I was wondering if you could just talk about the types of customers that you’re serving in the corporate market. And is it possible to serve those customers in a more programmatic way where you’re potentially doing multiple projects for the same customer in different regions? And then I’m also curious on the competitive side, are you seeing more entrants into that corporate market? I mean, right now, it sounds like there is only private competitors, are you anticipating larger players entering now?

Sumant Sinha — Founder, Chairman and Chief Executive Officer

Yeah. So you know, I think, what is happening is right now a number of corporates in India are looking at buying clean energy for the first time. And so they are — they’re sort of getting into it with the first step. And therefore they’re taking a little bit longer to understand and they are going ahead with let’s say a smallish megawatts to begin with or a smaller project to begin with. Now — and then that’s why we’ll be talking about corporate PPAs for a while and we’ve always said that it’s going to take time for us to build momentum, but we’ve now after a lot of effort over the last year or two, we’ve been able to build that momentum and that effort.

Now, you’re absolutely right, as the same corporates now get familiar and comfortable and they recognize the cost savings that they’re able to get and the value that they can get in terms of going green, they will start looking at ramping up their activity and the purchase in clean energy. And there for us to be the company that has done the first project with them, hopefully having given them a good experience. And keep in mind the point you’re making that in a number of cases from a regulatory standpoint, the customer needs to take a 26% equity stake as well. So they want the counterparty i.e., the developer to be a really credible counterparty and actually where we tend to have a significant advantage.

So as we go forward, our ability to penetrate into these customers for their future needs — the existing needs as well as the future growth that they will have, will be quite good. And that is therefore something that we will continue to work with these corporate customers on, and hopefully develop on a more programmatic basis as you suggested we should be doing, and that’s exactly what we are working on.

Now, our other competitors coming in, of course, they are, you would expect other companies who see the attractiveness of this market to try to come in. But because of the effort that we put in over the last couple of years, and the amount of — the amount of sort of progress we made in a number of very serious and significant conversations we’re having, we have a long runway to go of, conversations that we can conclude before any of our competitors begin to get in. The other thing is that, we’re a very good counterparty for them because of our independent governance, our NASDAQ listing. That gives us a bit of a halo, which also gets customers in some ways want to deal with us. So I think that’s also an advantage that we bring to the table. And it is for those reasons, we feel that this market will continue to be very attractive for us. And in our view, our expectation is that, almost a quarter of our total portfolio over the next two years will come from the corporate customer base.

Justin Clare — ROTH Capital Partners — Analyst

Okay. Got it. Appreciate it. Thank you.

Operator

[Operator Closing Remarks]