Reuters faces Indian billionaires in the race against solar domination

By Sudarshan Varadhan and Nidhi Verma

CHENNAI (Reuters) – Indian tycoon Mukesh Ambani’s introduction of $ 10 billion worth of renewable energy could boost solar tariffs to the ground and spark bidding wars with billionaire Gautam Adani, industry analysts say.

India’s two richest men are vying to prime minister Narendra Modi by 2030 to increase the world’s most populous country with the largest population of 450 in the world’s second most populous country.

They have mainly avoided operating in each other’s space and the highest profile among them will be the renewable energy that will be promoted by Ambani’s flagship Reliance Industries and the Adani business group.

Ambani, 64, founded the family-owned petrochemical and textile business in a vast empire that includes telecommunications and retail. Adani, 59, is a self-made billionaire who specializes in generating, transporting and distributing electricity and focusing on the operation of ports and airports.

The two billionaires – and Modi – are from the western Indian state of Gujarat.

Ambanik announced last month that it will build 100 GW of solar power over the next nine years. He said his team will spend $ 10 billion over the next three years to build solar manufacturing units, an energy storage battery plant, a fuel cell factory and a green hydrogen production unit.

Three days later, Adani announced that it would add 5 GW per year to its green energy this decade, from the current level of around 3.5 GW.

Analysts say there is enough space for India’s green energy to grow as part of its ambitious goal, but tariffs could fall further as companies try to fight each other in aggressive bidding wars.

India’s solar tariffs are already among the lowest in the world, as auctions in Gujarat have fallen below 2 Indian rupees ($ 0.0269) per kilowatt-hour.

“By 2030, I would expect (solar tariffs) to reach 1 rupee per kilowatt hour,” said Tim Buckley, director of energy finance studies at the Institute of Energy Economics and Financial Analysis.

Reliance has confused opposing businesses. With mobile phone and data plans, the Jio telecommunications project has fired Vodafone (NASDAQ 🙂 market leaders for five years to become India’s largest telecom operator and Bharti Airtel.

THE STRENGTH OF COAL IS NEEDED

Both Ambanik and Adani have built fossil fuel businesses. Reliance runs the world’s largest complex refinery in Gujarat’s Jamnagar, while Adani is the country’s largest private sector operator of coal-fired thermal power stations and the country’s largest coal trader.

India is the third largest emitter of greenhouse gases in the world. Coal-based energy generation could fall dramatically as the main players go green, analysts say.

Leading analyst Rishab Shrestha Wood Mackenzie has said he expects coal production in India in the early 2030s to drop to 50% today from more than 70%.

“We expect the cost of building new coal-fired power plants in India to be $ 62 / MWh by 2030, 25% higher than solar-powered,” Shrestha said.

Adani has not announced any plans to build new thermal power plants, and his companies are unlikely to be affected by the relatively high energy costs used with coal.

Both groups are trying to improve clean energy credentials as investors pay more attention to the environmental impact of their businesses and make decisions based on ESG ratings, analysts say.

Today one of Adani’s main businesses, Adani Green Energy, dominates India’s renewable space. Its shares have risen more than 156% in the last year.

Ambani wants Reliance to have zero carbon by 2035, ahead of the world’s top oil target by 2050, such as Royal Dutch Shell (LON 🙂 and BP (NYSE :).

“Confidence will be the most credible player in the country’s renewables over the next two years. Its ESG scores will also improve, significantly attracting money from ESG funds around the world,” Jefferies (NYSE 🙂 said in a statement.

If the two companies achieve their goals, Reliance will have twice the solar capacity of 100 GW more than Adani, and together the companies would take one-third of all India’s 2030 targets.

Adani, who has been criticized for developing an Australian coal mine and doing business with organizations that claim to be linked to Myanmar’s armed forces, needs to do more to achieve better sustainability scores, Buckley said.

The Adani group has denied ties to the Myanmar military and said it could write an investment in a port terminal in Myanmar. He said the Australian coal mine created jobs for the locals, and that it was very important to ensure energy security.

“Financial markets aren’t agnostic for ESG, so it needs to talk,” Buckley said.

(1 $ = 74.7725 Indian rupee)