Reuters
Billionaire Gautam Adani, founder of the Adani Group, was charged with fraud in the United States last month.
Corruption charges brought by a US court against the Adani Group are unlikely to significantly upend India's clean energy goals, industry executives told the BBC.
Delhi has committed to meeting half of its energy needs, or 500 gigawatts (GW) of electricity, from renewable sources by 2032, which is critical to global efforts to combat climate change.
The Adani group is expected to contribute one-tenth of this capacity.
Legal problems in the United States could temporarily delay the group's expansion plans but will not affect the government's overall objectives, analysts say.
India has made impressive progress in building clean energy infrastructure over the past decade.
The country is growing “the fastest among major economies” in increasing renewable energy capacity, according to the International Energy Agency.
Installed clean energy capacity has increased fivefold, with around 45% of the country's electricity generation capacity – of almost 200 GW – coming from non-fossil fuel sources.
Accusations against Adani Group – crucial to India's clean energy ambitions – are 'like a passing dark cloud' and will not have a significant impact on that momentum, a former CEO says from a rival company, wishing to remain anonymous.
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India has committed to meeting half of its energy needs from renewable sources by 2032.
Gautam Adani has pledged to invest $100 billion (£78.3 billion) in India's energy transition. Its green energy arm is the country's largest renewable energy company, producing nearly 11 GW of clean energy through a diverse portfolio of wind and solar projects.
Adani aims to increase this capacity to 50 GW by 2030, which will represent almost 10% of the country's installed capacity.
More than half, or 30 GW, will be produced in Khavda, in the western Indian state of Gujarat. It is the world's largest clean energy plant, said to be five times the size of Paris and the centerpiece of Adani's renewable energy crown.
But Khavda and Adani's other renewable energy facilities are now at the center of charges brought by U.S. prosecutors: They allege the company won contracts to supply electricity to state distribution companies from these facilities, in exchange for bribes to Indian officials. The group denied this.
But the consequences at the business level are already visible.
When the indictment was made public, Adani Green Energy immediately canceled a $600 million bond offering in the United States.
French group TotalEnergies, which owns 20% of Adani Green Energy and has a joint venture to develop several renewable energy projects with the conglomerate, announced it would halt any further capital injections into the company.
Major credit rating agencies – Moody's, Fitch and S&P – have since changed their outlook on Adani group companies, including Adani Green Energy, to negative. This will impact the company's ability to access funds and make raising capital more expensive.
Analysts have also raised concerns about Adani Green Energy's ability to refinance its debt, as international lenders grow weary of adding exposure to the group.
Global lenders like Jeffries and Barclays are already reportedly reviewing their ties with Adani, even as the group's reliance on global banks and international and local bond issues for long-term debt has increased from to barely 14% in fiscal 2016 to almost 60%. of date, according to a note by Bernstein.
Japanese brokerage firm Nomura says new funding may dry up in the short term but is expected to “gradually resume in the long term”. Meanwhile, Japanese banks like MUFG, SMBC, Mizuho are expected to continue their relationships with the group.
“The reputational and sentimental impact” will fade in a few months as Adani builds “strong, strategic assets and creates long-term value,” the unnamed CEO said.
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Adani Group's Khavda facility is world's largest clean energy plant
An Adani Group spokesperson told the BBC it was “committed to meeting its 2030 targets and confident of delivering 50GW of renewable energy capacity”.
Adani shares have recovered sharply from the lows they reached after the US court indictment.
Some analysts told the BBC that a possible slowdown in Adani's funding could actually end up benefiting its competitors.
While Adani's financial clout has allowed it to expand rapidly in the sector, rivals such as Tata Power, Goldman Sachs-backed ReNew Power, Greenko and state-owned NTPC Ltd are also significantly increasing their capacity. manufacturing and production.
“Adani is not a champion of green energy. It is a major player that has walked both sides of the street, being the largest private developer of coal plants in the world,” said Tim Buckley, director from Climate Energy Finance.
A large entity, “perceived as corrupt” and likely to slow its expansion, could mean “more money will start flowing to other green energy companies,” he said.
According to Vibhuti Garg, director of South Asia at the Institute of Energy Economics and Financial Analysis (IEEFA), market fundamentals also remain strong, with demand for renewable energy outstripping supply in India, which should keep the appetite for big investments intact.
What could actually slow the pace of India's clean energy ambitions is its own bureaucracy.
“The companies we follow are very optimistic. Financing is not an issue for them. Rather, it is state-level regulations that are a deterrent,” says Garg.
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Many Indian companies are also significantly increasing their manufacturing and clean energy production capacity.
Most state-owned electricity distribution companies continue to face financial constraints, opting for cheaper fossil fuels, while dragging their feet in signing purchase agreements.
According to Reuters, the controversial tender won by Adani was the first major contract awarded by state-owned Solar Energy Corp of India (SECI) without a guaranteed purchase agreement from distributors.
The SECI chairman told Reuters there were 30 GW of operational green energy projects in the market without buyers.
Experts say the 8GW solar contract at the heart of Adani's US indictment also sheds light on the complicated bidding process, which required solar power companies to also manufacture modules, which limited the number of bidders and led to higher energy costs.
The court's indictment will certainly lead to a “tightening of the rules on tenders and tenders”, believes Ms Garg.
A cleaner tender process, reducing risk for both developers and investors, will be important in the future, Mr Buckley agrees.
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