- They have mostly avoided operating in each other's space and therefore the refore the renewable energy push by Ambani's flagship Reliance Industries and the Adani group of companies are going to be the very best profile faceoff between them.
Indian tycoon Mukesh Ambani‘s $10 billion entry into renewable energy could drive solar tariffs further to the bottom and ignite bidding wars with fellow billionaire Gautam Adani, industry analysts say.
India’s two richest men are vying to be at the forefront of Prime Minister Narendra Modi’s ambition to build up green energy capacity within the world’s second-most populous country quite four-fold to 450 gigawatts (GW) by 2030.
They have mostly avoided operating in each other’s space and therefore the renewable energy push by Ambani’s flagship Reliance Industries and the Adani group of companies are going to be the very best profile faceoff between them.
Ambani, 64, built up his family-owned petrochemicals and textiles business into a sprawling empire including telecoms and retail. Adani, 59, may be a self-made billionaire who has focused on electricity generation, transmission and distribution, and therefore the operation of ports and airports.
Ambani announced last month he will build 100 GW in solar power capacity over the subsequent nine years. He said his group would spend $10 billion over the subsequent three years in building solar manufacturing units, A battery factory for energy storage, a cell factory, and a unit to supply green hydrogen.
Three days later, Adani announced that his green energy venture would add 5 GW per annum this decade, from a current level of about 3.5 GW.
Analysts say there’s sufficient space for multiple companies to grow as a neighborhood of India’s ambitious green energy target, but tariffs could fall further as companies attempt to outdo one another in aggressive bidding wars to win projects.
Solar tariffs in India are already at rock bottom within the world, having fallen below 2 Indian rupees ($0.0269) per kW-hr in auctions conducted in Gujarat.
“I would expect by 2030 that they (solar tariffs) will probably touch 1 rupee per kW-hr,” said Tim Buckley, director of energy finance studies at the Institute of Energy Economics and Financial Analysis.
Reliance features a diary of disrupting rival businesses. With cheap smartphones and data plans, its telecom venture Jio has in five years dethroned market leaders Vodafone Idea and Bharti Airtel to become the most important telecom operator in India.
Both Ambani and Adani have built businesses that supported fossil fuels. Reliance runs the world’s biggest refining complex at Jamnagar in Gujarat while Adani is India’s largest private-sector operator of coal-fired thermal stations and therefore the country’s largest coal trader.
India is that the world’s third-biggest emitter of greenhouse gases. Coal-based power generation could drop dramatically because the major players go green, analysts say.
Rishab Shrestha, senior analyst at consultancy Wood Mackenzie said he expects India’s coal generation share to drop to 50% in the early 2030s from over 70% currently.
“We expect the cost of building new coal plants in India to be $62/MWh by 2030, 25% above that of solar,” Shrestha said.
Adani has not announced plans to create any new thermal power plants, and his companies are unlikely to be suffering from relatively higher costs of coal-fired power.
Both groups try to enhance their clean energy credentials as investors pay more attention to the environmental impact of their businesses and make decisions supported by ESG ratings, analysts say.
One of Adani’s main businesses, Adani Green Energy, currently dominates India’s renewables space. Its shares have soared over 156% within the past year.
Ambani wants Reliance to become net carbon zero by 2035, much before the 2050 target of worldwide oil majors like Royal Dutch Shell and BP.
“Reliance will emerge because of the most credible renewables player within the country within the next two years. Its ESG scores also will improve, meaningfully attracting money from ESG funds globally,” Jefferies said during a note.
If both companies hit their targets, Reliance’s targeted solar capacity of 100 GW is going to be twice as large as Adani’s, and therefore the companies would together account for a 3rd of all of India’s 2030 target.
Adani, who has faced criticism for developing a coalpit in Australia and doing business with entities a rights group says are linked to the Myanmar soldiers, must do more to achieve better sustainability scores, Buckley said.
The Adani group has denied links to the Myanmar military and said it could write down an investment during a port terminal in Myanmar. it’s said the Australian coalpit created jobs for the locals and was critical to making sure energy security.