Azure Power (AZRE)

Company website 2020 Financial Report Stock Analysis ESG Report

Gigawatts

of operational and committed portfolio

95^%

CAGR

in operational MWs since 2009

7.8

Million Tons

of greenhouse gas emissions avoided since 2008

View Our Analysis

The Path to Drawdown: PV Solar Development

To solve climate change and remain below 1.5ºC of global warming, the globe needs to switch to generating power from fossil fuels to using 100% emissions free sources.

The largest source of this clean energy is the sun (barring advances in nuclear fusion). Photovoltaic or PV solar panels (the kind you see on rooftops) have emerged as the predominant way of capturing the sun's energy and converting it into electricity.

The industry has been growing fast and, as of 2020, solar panels are now the cheapest source of electricity in most places on earth.

Solar produces ~2% of global electricity today. According to Project Drawdown, to be on a path to remain under 1.5ºC of warming, utility scale solar (as opposed to rooftop solar) will need to be generating a combined ~26% of global electricity by 2050.

To get there, the PV solar industry is going to need to continue to massively scale over the few next decades:

<::marker> 720 TWh of solar electricity generated in 2019
<::marker> 28,200 TWh needed by 2050
<::marker> CAGR of 12.56% from 2019 - 2050

Another analysis from the IEA predicts that in order to reach a 100% clean electricity grid by 2050, annual solar panel manufacturing capacity will need to scale from 134 GWs in 2020 to 630 GWs in 2030 (p. 74).

About

Azure Power Global Limited (stock ticker: AZRE) is a leading independent solar power producer in India. It sells solar energy to central and state government utilities and independent industrial and commercial customers. Headquartered in New Delhi, India, Azure Power has steadily expanded its production across India.

AZRE's Role in Drawdown

AZRE’s operating solar portfolio is 2.1 GWs, or an estimated 2.66% of global utility solar production of 80.3 GWs. Assuming they retain a similar market-share, this would mean they will need to produce 9.7 GW of utility-scale solar power annually to remain on path to stay below 1.5C° by 2030.

Such growth would necessitate a 16.38% annual increase in production capacity. Given that AZRE grew their operational capacity 24% annually from 2017-2020 and it is projecting a CAGR of 24% (p. 8) over the 2021-2026 period; we are eager to see AZRE hit and surpass this goal.

AZRE: What We Like

AZRE has been focused on providing affordable solar power by expanding utility-scale projects throughout India. As of March 2021 (p. 4), AZRE’s operating GWs were 2.1 GWs and committed GWs (either under construction or power purchasing agreement pending) were 5 GWs, totaling a portfolio of 7.1 GWs. This represents a ~5.5x increase since September 2017 (p.8).

AZRE has committed to reducing GHG emissions from their own organization as well as from their supply chain.

<::marker> 30% reduction (p. 37) in scope 1 and 2 emissions per MWh generated by 2023.
<::marker> Reduction in scope 3 (p. 37) emissions by including only vendors and suppliers who monitor their own GHG emissions

AZRE is expanding project portfolio in an increasingly sustainable fashion.

<::marker> 52% reduction (p. 38) in net water consumption on site

AZRE has also shown its commitment to sustainability by joining global sustainability initiatives (p. 1)

<::marker> Reporting to CDP beginning in August 2020
<::marker> Joining the Task Force on Climate-related Financial Disclosures (TCFD)
<::marker> Joining the UN Global Compact
<::marker> Ranked in top 10 most sustainable global renewable energy companies by Sustainalytics

What We Want to See Improve

Diversify Customers

As AZRE acknowledges in its 2019-20 Sustainability Report, a large portion of the company’s contracted MWs are committed to three customers, two of whom are India’s central government entities. This is a potential risk if the Indian government becomes unable to meet capacity targets, or customers become unable or unwilling to fulfill contractual obligations.

Reduce non-renewable energy consumption

In its production and operation, AZRE consumes (p. 36) 1600 MWs of energy from fossil fuels (enough to power 150 homes for one year). We would like them to set out a clear plan to transition to fully renewable sources of energy by a specific date.

Clean the Supply Chain

AZRE is calling (p. 37) on its suppliers to track their GHG emissions, but it has not succeeded in doing so yet. We would like to see more comprehensive emissions reporting from purchased goods and services in AZRE’s reports along with a clear GHG emissions goal. Such transparency would enable us as investors to hold them accountable.

Related Solar Energy Stocks in the Climate Index

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Allocated	Company	Description
2.00%	Enphase Energy (ENPH)	Enphase makes micro-inverters, which are critical components in making rooftop solar more efficient. It's a key solution to expanding rooftop solar
1.18%	SolarEdge Technologies (SEDG)	SolarEdge makes power optimizer, solar inverter and monitoring systems for rooftop solar. These are key equipment in making solar power more efficient
0.82%	First Solar (FSLR)	First Solar makes innovative solar panels from a single glass substrate, making it possible to make panels in one factory in 4.5 hours
0.76%	Sunrun (RUN)	Sunrun makes and installs residential solar energy systems. Solar is a crucial centerpiece of electrifying everything
0.36%	Daqo New Energy (DQ)	Daqo makes high-purity silicon that goes into solar panel. This is a critical ingredient in converting sunlight into electricity
0.36%	Sunpower (SPWR)	Sunpower offers residential and commercial solar power systems and solar storage. Rooftop solar PV is one of the keys to an emissions-free energy system
0.33%	Shoals Technologies Group, Inc. (SHLS)	Shoals makes all of the components necessary for solar PV systems to connect to the grid. They’re helping expand solar energy
0.31%	Sunnova (NOVA)	Sunnova provides residential solar and energy storage systems in the United States. Both are critical for electrifying the energy system
0.17%	Array Technologies, Inc. (ARRY)	Array Technologies offers machine learning-based solutions that track the sun so that solar PV systems can generate more electricity
0.17%	Jinko Solar (JKS)	Jinko Solar is the largest solar panel maker in the world and heavy investor in solar R&D. They’re a key player in expanding solar energy
0.16%	Canadian Solar (CSIQ)	Canadian Solar makes and ships solar panels all over the world. This is critical for electrifying everything
0.14%	Gibraltar Industries, Inc. (ROCK)	Gibraltar Industries makes the mounting racks for solar panels that are tailor-made for the buildings and fields where solar systems will be placed
0.07%	Azure Power (AZRE)	Azure Power develops solar power for central and state government utilities in India. Solar power is a key centerpiece of a zero-emissions energy system
0.07%	Maxeon Solar Technologies, Ltd. (MAXN)	Maxeon Solar Technologies makes solar panels and related solar system components worldwide - a critical piece in a zero-emissions energy mix of the future
0.05%	FTC Solar, Inc. (FTCI)	FTC Solar offers solar tracker systems so that solar PV systems can produce more electricity. Expanding solar energy is key to a decarbonized world
0.03%	Renesola Power (SOL)	Renesola Power develops utility-scale solar projects in over 10 countries. This is the type of effort needed to scale solar power to electrify the grid
0.02%	iSun, Inc. (ISUN)	iSun is one of the biggest commercial solar developers in the US. They’re a valuable contributor to expanding solar power
0.02%	Orbital Energy Group, Inc. (OEG)	Orbital Energy offers engineering, construction, and maintenance for utility-scale solar systems. They help expand solar power
0.02%	SPI Energy Co., Ltd. (SPI)	SPI Energy develops solar PV solutions for businesses, residential, government and utility customers. Expanding solar is key to a clean energy system
0.02%	Sunworks (SUNW)	Sunworks makes solar power systems for a wide range of markets. Solar is a key zero-carbon energy source