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If there is one word to describe India’s dramatic drive to accelerate its renewable energy sector, it is ambition.
And governments aren’t the only ones betting big on renewable energy. His two biggest companies in the country, Reliance Industries Limited (RIL) and his Adani Group (AG), and the rival billionaires who lead them, are raising hopes with renewable gigaplans.
At RIL’s annual meeting on August 29, Chairman Mukesh Ambani, who is currently India’s second richest person, said the petrochemical giant would invest in clean energy hardware manufacturing if current plans are achieved. You said you could double it. Last year, RIL announced that he plans to spend $10 billion (all figures in US dollars) over the next three years to build four factories in Jamnagar, Gujarat, to manufacture solar panels, electrolyzers, fuel cells and batteries. announced. It is part of his 15-year vision for RIL to be net zero by 2035 and to become a leading new energy and new materials company.
Not to be outdone, Gautam Adani, chairman of AG, who recently overtook Ambani as India’s richest person to become the world’s second-richest person, said on Sept. announced plans to invest more than $100 billion in investments in 70% of him will be in the energy transition sector.
“We are already the world’s largest solar player and we plan to do more,” said Adani.
This investment is big news for entrepreneurs who have made their fortunes on fossil fuels. AG’s flagship entity, Adani Enterprises, is the country’s largest coal trader, and the RIL conglomerate owns the world’s largest oil refining hub.
Investing in renewable energy is nothing new for either billionaire. Adani Green Energy Limited (AGEL), owned by AG, is already one of India’s largest renewable energy companies, with a current project portfolio of 20,434 megawatts, enough to power 16.7 million homes. . 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 at Kamthi, Ramanathapuram with a capacity of 648 megawatts. That same year, Ambani expressed interest in expanding into the renewable energy sector. World’s top businessmen including Bill Gates, Mukesh Ambani, Ratan Tata and Jack Ma join Breakthrough Energy Group at the same time as India’s move to launch an international solar alliance. announced. Bringing affordable, reliable, carbon-free power from the lab to the market.
We are already the world’s largest solar player and we plan to do more.
Gautam Adani, Chairman of Adani Group
It’s not hard to guess why RIL and AG are competing to lead the growth of renewable energy in India. First, there is a global shift towards renewable energy, thanks to persistent climate change advocacy, forcing many oil and mining giants to enter the space. The energy sector accounts for about 40% of India’s total greenhouse gas emissions, while the petroleum industry accounts for 25% of him. Decarbonization of both the Adani and Ambani bread and butter sectors must be a priority if India is to achieve her net zero target by 2070.
Second, the Indian government announced ambitious policies across the renewable energy value chain. This is attractive for capital. For example, in her 2022/2023 annual budget, the Indian government has outlined plans to spend an additional $2.6 billion to boost local production of solar modules to cut imports from China. In August, India pledged to reduce its GDP emissions intensity by 45% from 2005 levels by 2030, and to make half of its installed power generation capacity non-fossil fuel-based by 2030. did.
Finally, ESG (Environmental, Social and Governance) factors are becoming more important for companies due to the regulatory framework, changing the priorities of institutional and retail investors as well as banks. “Approximately $1.7 trillion of his ESG funds were issued globally last year in both bonds and loans,” said Shantanu Srivastava, an energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA). I will explain. “Ambani and Adani know the trends better than anyone.”
“RIL is an oil and gas major, which is a reliable source of funding. We are looking for the next growth opportunity,” says Srivastava. “Besides, public companies always want to let shareholders know that they are betting heavily on future growth. Future growth is in the renewable energy sector.”
An exciting aspect of India’s renewable energy story is that while these two giants are increasing their investment in the sector, they are also eyeing different segments of the pie to meet their climate business goals. That’s it.
Amit Kumar, Senior Fellow, World Resources Institute (WRI) India, said the green plans for both Ambani and Adani include setting up huge factories for photovoltaics (PV) and green hydrogen. But Adani explains that it is also accelerating investments in power generation, distribution and transmission. Renewable energy. “Both play to their core strengths,” says Kumar.
Still, he adds: [green hydrogen]It will benefit the whole world. ”
green hydrogen, black coal
RIL is nothing new with hydrogen. It is one of the world’s largest producers of gray hydrogen (produced from fossil fuels). But the company wants to move from gray hydrogen to green hydrogen (produced using renewable energy) by 2025. Last year, RIL’s clean energy arm, Reliance New Energy Solar, signed a deal with Denmark-based Stiesdal to develop a new technology for manufacturing hydrogen electrolysers. India, among other things, plans to bring down the price of green hydrogen to $1/kg by the end of the decade (from $4/kg currently to $6/kg).
On September 7, Adani stepped into the green hydrogen circle, announcing that the group aims to produce 3 million tonnes of green hydrogen annually by 2030. (In June, French energy giant TotalEnergies bought his 25% stake in Adani New Energy for $12.5 billion for the production and commercialization of green hydrogen.)
But the two businessmen aren’t putting all their eggs into the green energy basket. Both continue to invest heavily in fossil fuel businesses.
At RIL’s AGM in August, Ambani announced that it will invest Rs. Of the company’s 530.2 million gigajoules of energy consumption, only 3.12 million was renewable, according to RIL’s 2021/2022 annual report.
Adani’s AG significantly increased its coal imports last year, importing 1.4 million tonnes in June this year, up from 154,000 tonnes a year earlier, according to market data from CoalMint.
Then there’s Adani’s controversial Carmichael project in Queensland, Australia. Over 11 billion tonnes of coal reserves are enough to meet India’s total coal demand for 12 years. Adani was originally expected to extract up to 60 million tonnes of coal per year from the mine.However financial times The company has faced heavy protests and reports it has cut its plans to 10 million tonnes. According to the company’s statement, the process of mining coal emits 240,000 tons of carbon dioxide.
Coal currently contributes to nearly 70% of India’s electricity production, but that share is declining.
At the India Global Forum on June 30, Adani defended investing in coal, saying a shift away from cheaper fossil fuels “should not stifle the aspirations of thousands of people who lack electricity.” I was.
just a transition?
Coal concerns aside, many in India fear that the RIL/AG-led integration of the renewable energy sector will lead to a duopoly and thwart dreams of a just transition.
And there are potential environmental and social costs of such large-scale renewable development – displacement, land acquisition, disruption of biodiversity and agriculture.
Ulka Kelkar, Head of Climate Program at WRI India, recently analyzed a map of all renewable energy projects around the world and found that most new renewable projects in India are on farmland and biodiversity-rich grasslands. found to be built. “It’s farmland. [It] I don’t know if it will yield much, but the fact is that new renewable energy projects in India are replacing farmlands and grasslands,” she says.
Safeguards need to be put in place to ensure inclusive development, said Ashwin Gambhir, a fellow at the energy nonprofit Prayas. “Plans can be made to devise renewable energy-specific land use policies that encourage long-term land leases that benefit the community.”
According to the World Economic Forum’s white paper, India’s decarbonization efforts could unlock more than $15 trillion in opportunities and create as many as 50 million new jobs by 2070. Her first $1 trillion of this opportunity could be realized through concerted action within this decade.
According to a recently released Mercom report, foreign direct investment in India’s renewable energy sector in the first quarter of fiscal year 2022/2023 increased by 269% compared to the same period last year.
This is good news, but ultimately the pace of moving away from fossil fuels will depend on how quickly the cost of storing green hydrogen and renewable energy drops. Despite current constraints and future uncertainties, India’s renewable energy sector is making headway. Ambani and Adani are not alone. Legacy player Tata Power announced at the 103rd AGM in July that he plans to spend Rs 750 billion (US$9.5 billion) to expand the capacity of his renewable energy business over the next five years. . Then there is the state-owned NTPC and other powerful private companies such as ReNew Power and Suzlon.
With so many ambitious players competing and even more offshore, the Indian renewables race has truly begun.
K. Dasgupta is a journalist based in Kolkata, India. She writes about climate and the United Nations Sustainable Development Goals.
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