Do Adani’s woes matter for India’s clean energy transition?

The absence is another indication of the holding pattern the group has found itself in since US short-selling firm Hindenburg Research alleged in late January that the companies had engaged in fraud and share price manipulation. . Scared investors have sold tens of billions of dollars in shares, while the company’s alleged closeness to Indian Prime Minister Narendra Modi has dominated politics in recent weeks.

The group has a considerable stake in India’s clean energy future: Adani’s renewable energy ambitions represent 10% of the country’s clean energy targets. But some analysts say the group’s setbacks won’t hurt India’s energy transition, especially in the medium to long term. And with a government-favored big player like Adani forced to downsize, companies that were reluctant to bid on clean energy projects in India are likely to step up now, leading to a more competitive market and greater investment. in India’s green energy market, observers say.

The Adani Group, led by founder Gautam Adani, influences the lives of millions of people in India. It builds roads and manages airports, operates some of its largest ports, manufactures defense equipment and sells cooking oil.

More recently, the tycoon who made his fortune betting on coal in an energy-starved country in the 1990s and remains India’s biggest private developer of new fossil fuel projects, was aiming to become his biggest player in renewable energies by 2030.

The group has a clean energy portfolio of more than 20 gigawatts of renewable energy, including 10 gigawatts of solar energy, representing approximately 5% of clean energy nationwide. Its renewable energy portfolio is spread across 12 Indian states and includes one of the world’s largest solar power plants in the southern state of Tamil Nadu. Last September, Gautam Adani said the group would invest $70 billion in clean energy projects by 2032.

What seems to have changed, at least in the short term, is the group’s ability to raise funds for its ambitious expansion plans.

Adani is still working on existing renewable energy projects, but not on current ones. The French TotalEnergies has suspended a 4 billion dollar investment plan to develop green hydrogen with the Adani group. It has also not been tendered for new projects since the Hindenburg report.

But India’s Energy Minister RK Singh in February dismissed concerns that Adani’s green business shares along with the rest of his plummeting portfolio could affect the country’s green ambitions in any way. either.

Vinay Rustagi, managing director of renewable energy consultancy Bridge to India, agrees the long-term effects will be minimal, but said there could be short-term successes. And there can be benefits in opening up space for other businesses, said Tim Buckley, director of Australia-based Climate Energy Finance, which has tracked Adani Group’s growth for decades.

Buckley said there are other Indian companies interested in investing in renewables and there could now be an acceleration in India’s transition to cleaner energy. India is the biggest emitter of global warming gases behind China, the US and the EU, and aims to produce 450 gigawatts of renewable energy by 2030. That would require just over half of India’s total installed capacity will be clean by the end. of the decade.

But the Adani Group’s continued interest in new fossil fuel projects has put the Indian government under pressure to put in place a fossil fuel program and “less pressure to provide renewables”, Buckley said. .

“Ultimately, it’s about removing the largest private developer of new fossil fuel projects in India, thereby reducing their impact on the political system and democracy in India,” he said.

The company consistently aligned with India’s national priorities and was one of the first to venture into sectors like hydrogen or energy storage that were important to the government. Since the report, India’s opposition parties have demanded an investigation into the company and questioned Prime Minister Narendra Modi’s closeness to Gautam Adani.

Outside of the Adani Group, major Indian clean energy companies such as Renew power, Tata power, Greenko energy holdings and the government-funded National Thermal Power Corporation are aggressively increasing their renewable energy capacity.

Analysts say India’s renewable energy market is also attractive to foreign investors given the huge potential for rapid growth. The country needs to build 35 to 40 gigawatts of renewable energy capacity every year to meet its 2030 goals.

With so many players keen to invest in India, Rustagi said any ripple effect of Adani’s ordeal on the sector will be “probably temporary”.

Ghosal reported in New Delhi, India.

Follow Sibi Arasu on Twitter at @sibi123 and Aniruddha Ghosal at @aniruddhg1

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