By Abbas Nazil
Bribery charges against the Adani Group in a US court are unlikely to significantly impact India’s ambitious clean energy targets, industry experts say.
While the allegations have caused turbulence for the conglomerate, analysts believe they will not derail the nation’s commitment to sourcing 50% of its energy needs—or 500 gigawatts (GW)—from renewable sources by 2032.
India has made remarkable progress in renewable energy development over the past decade, becoming the fastest-growing major economy in adding renewable capacity, according to the International Energy Agency.
Installed clean energy capacity has quintupled, with nearly 45% of the country’s total power generation capacity—approximately 200GW—now derived from non-fossil fuel sources.
The Adani Group, a major contributor to India’s renewable energy ambitions, has pledged $100 billion to drive the country’s energy transition.
Its green energy arm, Adani Green Energy, is currently India’s largest renewable energy company, producing 11GW of clean energy through wind and solar projects.
The group has set a target to scale this to 50GW by 2030, nearly 10% of the country’s total renewable capacity.
However, Adani’s legal troubles could temporarily disrupt its growth plans. US prosecutors allege that the conglomerate bribed Indian officials to win contracts for renewable energy projects, including the massive Khavda solar and wind energy plant in Gujarat, which is expected to produce 30GW of power and serve as a centerpiece of India’s green energy expansion.
Adani has denied the allegations, but the fallout has already begun affecting its financial standing.
Following the indictment, Adani Green Energy canceled a $600 million bond offering in the US. Its partner, France’s TotalEnergies, which owns a 20% stake in the company, has also paused fresh capital investments.
Credit rating agencies such as Moody’s, Fitch, and S&P have downgraded their outlook on Adani Group companies, including Adani Green Energy, making it more expensive for the conglomerate to raise funds.
Global financial institutions, including Barclays and Jeffries, are reportedly reevaluating their ties with Adani. Meanwhile, the group’s reliance on international and local bond markets has increased from 14% in 2016 to nearly 60% in recent years.
While Japanese banks like MUFG, SMBC, and Mizuho are expected to maintain their financial relationships with the company, Nomura notes that new financing might dry up in the short term but could gradually resume in the long term.
Some analysts believe Adani’s competitors could benefit from this temporary slowdown. Companies such as Tata Power, ReNew Power (backed by Goldman Sachs), Greenko, and state-run NTPC Ltd are already ramping up their renewable energy capacities.
Adani’s financial influence has allowed it to expand rapidly in the sector, but its legal issues might open opportunities for others.
Adani’s reputation as both a major renewable energy developer and a leading private developer of coal plants has drawn mixed reactions.
According to Tim Buckley, director of Climate Energy Finance, the slowdown in Adani’s expansion could redirect investments to other green energy companies, potentially diversifying the sector.
Despite the controversy, the broader market fundamentals remain strong. Demand for renewable energy continues to outpace supply in India, driving investor interest.
Experts, including Vibhuti Garg, South Asia director at the Institute for Energy Economics and Financial Analysis (IEEFA), emphasize that state-level regulations, rather than financial constraints, are the primary deterrent to faster renewable energy adoption.
State-run power distribution companies, often financially strained, prefer cheaper fossil fuels and have been slow to sign purchase agreements for renewable projects.
For instance, the Solar Energy Corporation of India (SECI) has 30GW of operational green energy projects waiting for buyers, highlighting the inefficiencies in state-level policy implementation.
The controversial 8GW solar contract at the center of the Adani indictment illustrates deeper issues within India’s tendering process.
The bidding required solar power companies to manufacture modules, narrowing the pool of eligible participants and driving up power costs.
This tender, issued by SECI, was also the first major contract without guaranteed purchase agreements from distributors, exposing developers to higher risks.
The case is expected to prompt tighter regulations and cleaner tendering processes, reducing risks for both developers and investors.
Such changes are crucial for maintaining the momentum of India’s renewable energy transition.
Adani stocks, which initially plummeted following the indictment, have since recovered. The group remains steadfast in its commitment to its 2030 targets, with a spokesperson expressing confidence in delivering 50GW of renewable capacity.
While the reputational damage is significant, industry leaders view the issue as a temporary setback.
The overarching sentiment among experts is that India’s renewable energy goals are resilient enough to withstand the challenges faced by a single player, even one as influential as Adani.
Source: BBC Newsletter