# Indian billionaires face off in race to solar domination
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-07-07
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Mukesh Ambani's $10bn Solar Energy Drive Expected to
Meta Description: Analysts say Ambani's flagship Reliance Industries and Adani group's renewable energy push could lead to aggressive bidding wars and lower solar
URL: https://financedigest.com/indian-billionaires-face-off-in-race-to-solar-dominationhtml

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By Sudarshan Varadhan and Nidhi Verma

CHENNAI (Reuters) – Indian tycoon Mukesh Ambani’s $10 billion entry into renewable energy could drive solar tariffs further to the ground 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 ramp up green energy capacity in the world’s second-most populous country more than four-fold to 450 gigawatts (GW) by 2030.

They have mostly [avoided operating in each other’s space and the renewable energy push by Ambani’s flagship Reliance Industries](https://www.financedigest.com/how-can-the-insurance-industry-avoid-having-a-kodak-moment.html "How can the insurance industry avoid having a ‘Kodak Moment?’") and the Adani group of companies will be the highest profile faceoff between them.

Ambani, 64, built up his family-owned petrochemicals and textiles [business into a sprawling empire including telecoms and retail](https://www.financedigest.com/it-outages-financially-cripple-retail-businesses.html "IT outages financially cripple retail businesses"). Adani, 59, is a self-made billionaire who has focused on [electricity generation](https://www.financedigest.com/the-electric-vehicle-sound-generator-market-to-create-turbulence-in-automotive-sector-at-a-cagr-of-14-between-2019-and-2029.html "The Electric Vehicle Sound Generator Market to create turbulence in automotive sector at a CAGR of 14% between 2019 and 2029"), transmission and distribution and the operation of ports and airports.

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

Ambani announced last month he will [build 100 GW in solar](https://www.financedigest.com/public-power-corp-rwe-to-build-five-solar-farms-in-greece.html "Public Power Corp, RWE to build five solar farms in Greece") energy capacity over the next nine years. He said his group would [spend $10 billion](https://www.financedigest.com/chipmaker-infineon-ready-to-spend-billions-on-acquisitions-ceo.html "Chipmaker Infineon ready to spend billions on acquisitions – CEO") over the next three years in building solar manufacturing units, a battery factory for energy storage, a fuel cell factory, and a unit to produce green hydrogen.

Three days later, Adani announced that his [green energy](https://www.financedigest.com/green-initiatives-cut-self-storage-business-space-stations-energy-costs-by-75.html "Green initiatives cut self-storage business Space Station’s energy costs by 75%") venture would add 5 GW every year this decade, from a current level of about 3.5 GW.

Analysts say there is sufficient space for multiple companies to grow as a part of India’s ambitious [green energy target](https://www.financedigest.com/britains-tax-take-risks-blowing-green-energy-off-target.html "Britain’s tax take risks blowing green energy off target"), but tariffs could fall further as companies try to outdo each other in aggressive bidding wars to win projects.

Solar tariffs in [India are already among the lowest in the world](https://www.financedigest.com/mobile-wallets-in-india-what-the-world-can-learn.html "Mobile wallets in India: What the world can learn"), having fallen below 2 Indian rupees ($0.0269) per kilowatt hour in auctions conducted in Gujarat.

I would expect by 2030 that they (solar tariffs) will probably touch 1 rupee per kilowatt hour,” said Tim Buckley, director of energy finance studies at the [Institute of Energy Economics and Financial](https://www.financedigest.com/what-financial-institutions-will-be-like-in-10-years.html "What Financial Institutions Will Be Like In 10 Years") Analysis.

Reliance has a [track record of disrupting rival businesses](https://www.financedigest.com/5-fx-metrics-your-business-should-be-tracking.html "5 FX METRICS YOUR BUSINESS SHOULD BE TRACKING"). With cheap smartphones and data plans, its telecom venture Jio has in five [years dethroned market leaders Vodafone Idea and Bharti Airtel to become](https://www.financedigest.com/scottys-little-soldiers-become-incentive-fm-groups-chosen-charity-in-three-year-partnership.html "Scotty’s Little Soldiers Become Incentive FM Group’s Chosen Charity In Three Year Partnership") the largest telecom operator in India.

[COAL POWER](https://www.financedigest.com/back-to-black-germanys-coal-power-plan-hits-hurdles.html "Back to black? Germany’s coal power plan hits hurdles") MAY DECLINE

Both Ambani and Adani have built businesses based on [fossil fuels](https://www.financedigest.com/eu-approves-effective-ban-on-new-fossil-fuel-cars-from-2035.html "EU approves effective ban on new fossil fuel cars from 2035"). Reliance runs the world’s biggest refining complex at Jamnagar in Gujarat while Adani is India’s largest [private sector](https://www.financedigest.com/dollar-slides-on-contraction-in-private-sector-activity.html "Dollar slides on contraction in private sector activity") operator of coal-fired thermal stations and the country’s largest coal trader.

India is the [world’s third biggest](https://www.financedigest.com/three-of-the-worlds-biggest-asset-bubbles-willbitcoin-be-next.html "Three of the world’s biggest asset bubbles– willBitcoin be next?") emitter of greenhouse gases. Coal-based [power generation](https://www.financedigest.com/rising-investments-in-renewable-power-generation-to-amplify-demand-of-substation-monitoring-system-market-fact-mr-report.html "Rising Investments in Renewable Power Generation to Amplify Demand of Substation Monitoring System Market: Fact.MR Report") could drop dramatically as 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](https://www.financedigest.com/saipem-shares-drop-group-says-cannot-explain-why.html "Saipem shares drop, group says cannot explain why") to 50% in early 2030s from over 70% currently.

We expect cost of [building new coal plants](https://www.financedigest.com/bosch-to-build-215-million-plant-in-central-mexico.html "Bosch to build 5 million plant in central Mexico") in India to be $62/MWh by 2030, 25% higher than that of solar,” Shrestha said.

Adani has not announced plans to build any new thermal [power plants](https://www.financedigest.com/edpr-brings-iberias-first-wind-solar-power-plant-on-stream.html "EDPR brings Iberia’s first wind-solar power plant on-stream"), and his companies are unlikely to be affected by relatively higher costs of coal-fired power.

Both [groups are trying to improve their clean](https://www.financedigest.com/incentive-fm-group-strengthenswindow-cleaning-portfolio-with-acquisition.html "INCENTIVE FM GROUP STRENGTHENSWINDOW CLEANING PORTFOLIO WITH ACQUISITION") energy credentials as investors pay more attention to the environmental impact of their businesses and make decisions based on ESG ratings, analysts say.

One of Adani’s main businesses, Adani [Green Energy](https://www.financedigest.com/analysis-energy-market-turmoil-shakes-europes-green-power-plan.html "Analysis: Energy market turmoil shakes Europe’s green power plan"), currently dominates India’s renewables space. Its [shares have soared](https://www.financedigest.com/uks-argo-blockchain-shares-soar-on-deals-to-avoid-bankruptcy.html "UK’s Argo Blockchain shares soar on deals to avoid bankruptcy") over 156% in the past year.

Ambani wants Reliance to become net carbon zero by 2035, much ahead of 2050 target of global [oil majors such as Royal Dutch Shell](https://www.financedigest.com/shell-chevron-and-petrobras-weigh-guyana-oil-auction-bids-sources.html "Shell, Chevron and Petrobras weigh Guyana oil auction bids -sources") and BP.

Reliance will emerge as the most credible renewables player in the country in the [next two years](https://www.financedigest.com/eu-could-face-gas-shortage-next-year-iea-warns.html "EU could face gas shortage next year, IEA warns"). Its ESG scores will also improve, meaningfully attracting money from ESG [funds globally,”](https://www.financedigest.com/global-equity-funds-see-biggest-weekly-outflow-in-five-weeks.html "Global equity funds see biggest weekly outflow in five weeks") Jefferies said in a note.

If both [companies hit their targets, Reliance’s targeted solar capacity of 100 GW will be twice as large as Adani’s, and the companies would together](https://www.financedigest.com/alone-together-how-to-maintain-a-positive-company-culture-while-working-remotely.html "Alone together: How to maintain a positive company culture while working remotely") account for a third of all of India’s 2030 target.

Adani, who has faced criticism for developing a coal mine in [Australia and doing business](https://www.financedigest.com/5-common-tax-mistakes-small-businesses-make-in-australia.html "5 Common Tax Mistakes Small Businesses Make in Australia") with entities a rights group says are linked to the Myanmar armed forces, needs to do more to attain better sustainability scores, Buckley said.

The Adani group has denied links to the Myanmar military, and said it could write down an investment in a [port terminal](https://www.financedigest.com/german-coalition-divided-over-chinese-bid-for-hamburg-port-terminal.html "German coalition divided over Chinese bid for Hamburg port terminal") in Myanmar. It has said the [Australian coal mine](https://www.financedigest.com/glencore-to-sell-australian-copper-mine-to-spac-for-1-1-billion.html "Glencore to sell Australian copper mine to SPAC for .1 billion") created jobs for the locals, and was critical to ensuring energy security.

Financial [markets are not agnostic to ESG](https://www.financedigest.com/eu-watchdog-backs-esg-quality-label-for-market-benchmarks.html "EU watchdog backs ESG ‘quality label’ for market benchmarks"), so he has to walk the talk,” Buckley said.

($1 = 74.7725 Indian rupees)

(Reporting by Sudarshan Varadhan and Nidhi Verma; Editing by Sanjeev Miglani and Raju Gopalakrishnan)


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