If there is one word that captures India’s dramatic push to turbocharge its renewable energy sector, it is this: ambition.
And it’s not just the government betting big on renewable energy; the country’s two biggest corporations – Reliance Industries Limited (RIL) and Adani Group (AG) – and the rival billionaires who lead them have raised expectations with their renewable giga-plans.
Speaking at RIL’s annual general meeting on August 29, chairman Mukesh Ambani, now India’s second-richest man, said the oil-to-chemicals major may double its investment in clean-energy hardware manufacturing once its current plans are achieved. Last year, RIL unveiled a $10-billion plan (all figures in U.S. dollars) over the next three years to set up four factories in Jamnagar, Gujarat, to make solar panels, electrolyzers, fuel cells and batteries. This is a part of RIL’s 15-year vision to become a leading new-energy and -materials company, with plans to be net-zero by 2035.
Not to be outdone, on September 27, AG chair Gautam Adani, who recently overtook Ambani as India’s richest man and became the world’s second-wealthiest, announced at a Forbes conference in Singapore that the group plans to invest more than $100 billion in the next decade, of which 70% will be in the energy transition space.
“We are already the world’s largest solar player, and we intend to do far more,” Adani said.
The investments are big news for entrepreneurs who have made their fortunes off fossil fuels. Adani Enterprises, AG’s flagship entity, is the country’s biggest coal trader, and the RIL conglomerate owns the world’s largest oil refining hub.
Not that investing in renewables is entirely new for either billionaire. Adani Green Energy Limited (AGEL), owned by AG, is already one of the largest renewables companies in India, with a current project portfolio of 20,434 megawatts – enough to power 16.7 million households. AGEL develops, builds, owns, operates and maintains utility-scale grid-connected solar- and wind-farm projects.
Adani’s foray into the green energy business began in 2015, when he announced the world’s largest solar power plant, 648 megawatts at Kamuthi, Ramanathapuram. That same year, Ambani first indicated his interest in moving into the renewable-energy space. Coinciding with India’s move to launch an International Solar Alliance, the world’s top industrialists, including Bill Gates, Mukesh Ambani, Ratan Tata and Jack Ma, announced the Breakthrough Energy group, an international coalition of 28 investors formed to bring companies that have the potential to deliver affordable, reliable and carbon-free power from the research lab to the market.
We are already the world’s largest solar player, and we intend to do far more.
Gautam Adani, chair of Adani Group
It is not difficult to gauge why RIL and AG are competing to lead India’s growth in renewables. First, there has been a global shift toward renewable energy, thanks to sustained climate advocacy, forcing many oil and mining majors to enter the sector. The energy sector accounts for around 40% of India’s total greenhouse gas emissions, and the oil industry, 25%. Decarbonizing both sectors, Adani and Ambani’s bread and butter, will have to be a priority if India is to reach its goal of being net-zero by 2070.
Second, the Indian government has unveiled ambitious policies across the renewable-energy value chain, which are attractive for capital. For example, in its annual budget for 2022/2023, the Indian government outlined plans to spend an additional $2.6 billion to boost local manufacturing of solar modules to cut imports from China. In August, India committed to cutting the emissions intensity of its GDP by 45% from 2005 levels by 2030, as well as ensuring that half of its installed electricity generation capacity will be non-fossil-fuel-based by 2030.
Finally, ESG (environmental, social and governance) factors are becoming crucial for companies because of regulatory frameworks and are changing the priorities of banks, as well as institutional and retail investors. “Last year, around $1.7 trillion of ESG financing, both bonds and loans, were issued globally,” explains Shantanu Srivastava, an energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA). “Ambani and Adani know the trend better than anyone else.”
“RIL is an oil and gas major, and that’s its reliable source of money. But they know that the business doesn’t have too many growth triggers in the long run. AG, a relatively newer company, is looking for the next growth triggers,” says Srivastava. “Besides, listed companies would always want to let shareholders know that they are betting big on future growth. The future growth is in the renewable energy sector.”
The exciting aspect of India’s renewables story is that while these two corporate behemoths are ratcheting up investment in the sector, they are mostly eyeing different segments of the pie to achieve their climate-business goals.
Amit Kumar, senior fellow at World Resources Institute (WRI) India, explains that while both Ambani’s and Adani’s green plans include setting up giant factories for photovoltaics (PVs) and green hydrogen, Adani is also accelerating investments in the generation, distribution and transmission of renewable energy. “Both are playing to their core strengths,” Kumar says.
Still, he adds, “The ‘race’ between the two giants is important because it can bring down the costs of PVs and [green hydrogen]. It will benefit the whole world.”
Green hydrogen, black coal
RIL is not new to hydrogen. It is one of the largest producers of grey hydrogen (produced from fossil fuels) globally. However, the company wants to transition from grey to green hydrogen (produced using renewables) by 2025. Last year, RIL’s clean-energy arm, Reliance New Energy Solar, signed an agreement with Denmark-based Stiesdal to develop new technology to manufacture hydrogen electrolyzers in India, which, among other things, will reduce the price of green hydrogen to $1 per kilogram (from the current $4 to $6 per kilo) by the end of the decade.
On September 7, Adani stepped into the green hydrogen ring, announcing that the group aims to produce three million tonnes of green hydrogen a year by 2030, compared to the earlier target of 2.5 million tonnes. (In June, French energy giant TotalEnergies bought a 25% stake in Adani New Energy for $12.5 billion to produce and commercialize green hydrogen.)
However, the two businessmen are not putting all their eggs into the green energy basket. Both are still investing heavily in their fossil fuel businesses.
At RIL’s August AGM, Ambani announced it will invest Rs 75,000 crore (one crore equals 10 million rupees, or US$9.38 billion) in the next five years in expanding the company’s oil-chemical business. According to RIL’s 2021/2022 annual report, a mere 3.12 million of the company’s 530.2 million gigajoules of energy consumption was renewable.
According to market data from CoalMint, Adani’s AG dramatically increased its coal imports last year, bringing in 1.4 million tonnes this June, up from 154,000 tonnes the previous year.
Then there is Adani’s controversial Carmichael project in Queensland, Australia. The coal reserves of more than 11 billion tonnes are enough to meet India’s entire coal needs for 12 years. Adani was initially expected to extract up to 60 million tonnes of coal per year from the mine; however, the Financial Times reports that the company, facing intense protest, has downgraded that plan to 10 million tonnes. The process of mining that coal will produce 240,000 tonnes of carbon dioxide emissions, according to a statement from the company.
Coal currently contributes to almost 70% of India’s electricity production, though that share has been declining.
At the India Global Forum on June 30, Adani defended his investments in coal, saying that any shift away from cheaper fossil fuels “should not crush the aspirations of the thousands that lack electricity.”
A just transition?
Coal concerns aside, many in India fear that the RIL/AG-led consolidation of the renewable-energy sector may lead to a duopoly and hamper the dream of a just transition.
Then there are the potential environmental and social costs – displacement, land acquisition, disruption of biodiversity and agriculture – of such massive renewable development.
Ulka Kelkar, director of WRI India’s climate program, recently analyzed maps for all renewable-energy projects across the globe and found that most new renewable projects in India are being built over farmland and biodiversity-rich grasslands. “It is arable land. [It] may or may not be yielding much, but the fact is, India’s new renewable-energy projects are replacing agriculture land and grasslands,” she says.
Safeguards to ensure inclusive development must be put in place, says Ashwin Gambhir, a fellow at energy non-profit Prayas. “Devising a renewable-energy-specific land-use policy that encourages long-term land leasing to benefit communities can be planned.”
According to a World Economic Forum white paper, India’s decarbonization journey represents upwards of a $15-trillion opportunity by 2070, with the potential to create as many as 50 million new jobs. The first $1 trillion of this opportunity could potentially materialize with concerted action within this decade.
A recently released Mercom report said that foreign direct investment in India’s renewable-energy sector in the first quarter of fiscal year 2022/2023 saw an increase of 269% compared to the same period last year.
While this is good news, ultimately, the pace of the transition away from fossil fuels will depend on how quickly green hydrogen and renewable-energy storage costs come down. Despite the present constraints and future uncertainty, India’s renewable-energy sector is pushing ahead. And it’s not just Ambani and Adani. A legacy player, Tata Power, announced at its 103rd AGM in July that it plans to spend Rs 750 billion (US$9.5 billion) to expand the capacity of its renewable-energy business over the next five years. Then there is state-run NTPC and other robust private players such as ReNew Power and Suzlon, to name a few.
With so many ambitious players in the fray and more in the offing, India’s renewables race has truly begun.
K. Dasgupta is a journalist based in Kolkata, India. She writes about climate and the UN’s Sustainable Development Goals.
