What is your view on bess and fdre pivot ?
My ai assisted analysis shows following investment case.
I am currently looking at acme solar holdings
Currently it is solar IPP but it has plans to move to bess and fdre where has competive advantage. Fdre is becoming increasing mandate in government auctions due to reliablilty of round the clock power availability. It is integrating its fdre offering by placed order for 5gwh of bess to support. fdre projects attracts rs 2 per unit rate more than solar projects. Government support to bess projects through vgfs ( grants to provide 40% of cost of capital fo bess project). Now Battery cost have dropped significantly making fdre competitive to thermal power. Winning tenders in fdre. Revenue contribution from fdre to rise from current 7% to 35% in next 3-4 years as fdre projects are under construction and it has just started to hit the p&l from the coming quarter. Among competitors key advantage is lean epc and higher operation capacity utilisation.
Valuations seems ok to enter
The ebitda current Margisn are 91%, highest in sector
It seems like a risky bet as there is execution risk in managing this complex fdre projects. Battery quality also matters to project IRRs.
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i think we should stop looking at past or present.
the street is worried about future because the cost of setting up plant will go up 15-20% higher and PPA is fixed at 3-4 rs per unit. cost will go up because of rising cost of solar cells[because of silver] and lithium for BESS.
solar modules cost has gone up by 15-18%
BESS battery cells cost has gone up by 50-60%[the IRR of BESS was already very low and if they will set up plant in this environment the IRR will be in negative range.
although i am not qualified for giving advice but in my opinion the risk reward ratio is in negative or low. so i give it avoid or sell rating for myself.
disc- tracking not a buy sell reco.
ACME SOLAR HOLDINGS: PROJECT UPDATE
Commission Phase IV of large-scale BESS project in Rajasthan
CAPACITY DETAILS:
- Phase-IV: 33.33 MW / 160.48 MWh added
- Total project: 300 MW / 1409.34 MWh
- Total commissioned so far: 133.336 MW / 641.98 MWh
Strengthens presence in energy storage (BESS) and supports renewable integration & grid stability. This scale-up improves long-term revenue visibility, positions the company in the high-growth storage segment, increases demand for BESS with renewable expansion, and further commissions phases to drive growth.
Overall Positive, strong capacity addition in emerging energy storage space
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