Pioneering wind power generation company, WindForce, one of the largest producers of renewable energy in Sri Lanka will hold over 245MW in its portfolio at the end of the current financial year, and was the first Sri Lankan company to set up solar power plants in Pakistan, Uganda, and Ukraine, a media release from the company stated.
Renewable energy generation is known to be highly seasonal with Sri Lanka’s wind patterns varying throughout the year.
Therefore, as WindForce’s power generation is predominantly based on wind power, it is prudent to appraise the company’s financial performance in terms of gross profitability on an annual basis as opposed to a quarterly appraisal.
As the largest IPP (Independent Power Producer), WindForce has shown tremendous resilience amid turbulent times maintaining stability in both top-line and gross profitability over financial years 2021 and 2022. In FY21/22, the company recorded a group revenue of Rs. 4,393 mn contributing to a 2% YoY growth despite significant economic headwinds, and a gross profitability of Rs. 2,724 mn reflecting a gross profit margin of 62%.
The top-line achievement in FY21/22 was amid several operational disruptions such asa breakdown at the CEB’s Norochcholai Wind Collector Substation which was subsequently rectified in September 2021, as well as decreased operational capacity in WindForce’s Joule and Beta power plants due to blade damage caused by lightning. With repairs being made to the damaged turbine blades, the company expects to run at full capacity in the current financial year.
Key policy changes implemented by authorities such as the sudden floatation of the Sri Lankan Rupee in early March following a hard peg throughout, led to the company absorbing a significant exchange loss of Rs. 296 mn on foreign currency loans in a single quarter, i.e. Q4 of FY21/22.
However, it is important to note that all overseas project revenue is entirely foreign currency denominated, and all foreign currency debt is backed by foreign currency assets. In dollar terms, total FC assets stood at twice the total FC debt as of March 31, 2022, where FC assets are held at cost,and loans revalued quarterly.
WindForce has continued in its efforts to successfully venture into new projects in FY22/23 to support the company’s medium-long term growth. At the end of 2022, WindForce is expected to add 25MW of solar and wind power to the local grid, where operational earnings are expected to flow from the second quarter of FY 22/23 onwards.
On the international front, WindForce is exploring the possibility of expanding the Tororo solar plant in Uganda by 30MW and is awaiting the generation license approval from the Regulator in Uganda. Discussions are also underway with the utility in Senegal regarding the 30MW solar + 7.5MW battery energy storage system, to set a beneficial tariff rate.
Locally, the sector’s economic contribution is demanding change in overall industry dynamics, with a greater emphasis on the shift to renewable energy, and upward revisions in CEB tariff rates. As an IPP with a strong local presence and a foreign footprint, WindForce is well-positioned to capitalise on opportunities both locally and globally.