India is being considered in the 4th position globally in Renewable Energy Installed Capacity (which includes Large Hydro), 4th in Wind Power capacity and 4th in Solar Power capacity according to REN21 Renewables 2022 Global Status Report. This is the main reason why Adani investments in renewable energy has become the talk of the town.
India has set enhanced target at COP26 of 500 GW of the non-fossil fuel-based energy by the year 2030. India’s installed non-fossil fuel capacity saw an increase of ~396% over the previous 8.5 years and remains at over ~190.97 GW (which includes large Hydro and nuclear), ~44% of India’s total capacity (as at February 2024).
India has seen highest year-on-year growth in renewable energy additions of ~9.83% in FY22. Upto 100% FDI is being allowed in automatic route for renewable energy generation and distribution projects. However, these investments are required to meet the provisions of The Electricity Act 2003.
As a result of this, Adani Group has announced that it will invest ~INR 2.3 lakh crore through 2030 in the country’s renewable energy expansion and solar and wind manufacturing capacity addition ever. The company continues to pursue its trademark rapid growth plans.
Which of Adani’s companies will participate in the investments?
Adani investments in renewable energy has gathered the media’s attention as the conglomerate plans to invest big this time.
Adani Green Energy Ltd (AGEL), which is the country’s largest renewable energy company, plans to invest ~INR 1.5 lakh crore. These investments will be focused on expanding capacity to generate electricity from solar energy and wind power at Khavda in Kutch to 30 gigawatts from the present capacity of ~2 GW.
The company plans to add another ~INR 50,000 crore in 6-7 GW of similar projects elsewhere in India.
AGEL, that has an operating portfolio of ~10,934 megawatts (10.93 GW), has set a target of ~45 GW of renewable energy capacity by the year 2030. With this, ~30 GW of this is expected to come up in 1 location at Khavda.
Adani New Industries Ltd (ANIL), which is the unit of the company’s flagship Adani Enterprises Ltd, has plans to invest ~INR 30,000 crore for the expansion of solar cell and wind turbine manufacturing capacity at Mundra in Gujarat.
AGEL’s Managing Director has announced that it has just now commissioned ~2,000 MW (2 GW) of capacity at Khavda. The company will be adding ~4 GW in current fiscal (FY25) and ~5 GW in every year.
To help these plans and to meet requirements of several other domestic renewable players and export market, ANIL would be expanding cell and module manufacturing facility. This expansion will be at Mundra to 10 GW by FY27 from the present ~4 GW.
Why Adani investments in renewable energy should be taken with caution?
Renewable energy investments comes as the renowned conglomerate shrugs off the affect of Hindenburg Research. This short seller’s report was like a nightmare for the Adani group of companies.
In January last year, the short-seller report placed allegations that Adani companies did share price manipulation and accounting fraud.
After the report was released, Adani group of companies refused all such allegations. However, at one time, combined market cap of Adani companies declined by ~USD 150 billion. Recently, Chairman Gautam Adani mentioned that the company’s balance sheet remained “healthier than ever before”.
As weeks and months passed by, Gautam Adani starting reassuring investors and bondholders as it slowed its investment plans. The company also paid down its share-backed debt and sold stakes.
However, it is now being presumed that the conglomerate is now back with its breakneck speed expansion as it plans to sign back-to-back deals. Recently, it has entered into a deal with Reliance Industries Ltd’s billionaire Mukesh Ambani.
Gautam Adani is all set to expand at rapid pace
Apart from Adani investments in renewable energy, the billionaire has done some critical investments over the past couple weeks.
Adani Group opened $1.2 billion copper plant, purchased a port in Odisha and increased its stakes in the cement company. Not only this, Mukesh Ambani’s Reliance will buy ~26% in Gautam Adani’s Mahan Energen unit. This deal has ensured exclusive power arrangement for the period of ~20 years.
Adani aims to be world’s largest renewable energy producer by the year 2030, and Reliance has plans to build 4 gigafactories at Jamnagar in Gujarat. These 4 factories will be for solar panels, batteries, green hydrogen, and fuel cells.