IEEFA Suggest the Adani Group Should Lead India’s Energy Strategy

A new report identifies the opportunity for the Adani Group to lead India’s energy strategy by further aligning itself with the government’s vision

A new IEEFA report identifies the opportunity for the Adani Group to lead India’s energy strategy by further aligning itself with the government’s vision for energy independence and fast-growing reliance on renewables.

“The soaring value of Adani Green Energy is a clear indication of where the market, and this group, are heading,” said Tim Buckley, director of Energy Finance Studies, South Asia, at the Institute for Energy Economics and Financial Analysis (IEEFA).

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“Adani Green is now the largest listed energy company in India and one of the world’s biggest solar developers. Adani’s new strategic collaboration with Italy’s Snam to explore opportunities in green hydrogen is an exciting new development that suggests the group is scaling up its renewable ambitions even further.”

A pledge to close coal plants as power purchase agreements (PPAs) expire would enhance the group’s environmental, social and governance (ESG) ratings and ensure ongoing access to global capital to fund ambitious growth plans, according to the report’s authors Buckley and Simon Nicholas, energy finance analyst at IEEFA. Progressively phasing out coal power generation would be an economically rational strategic move for the Adani Group to make, adds Buckley. It would also be fully aligned with the Indian government’s intention to replace ageing coal plants with renewable energy.

“Adani Enterprises Ltd’s 12 bids for coal deposits in the recent auctions indicate the lack of foreign investor interest in coal and the government’s desire to reduce thermal coal imports and protect domestic investment and mining jobs. However, India can maximise its self-reliance by progressively replacing older, inefficient coal-fired power plants with cheaper renewables. The massive ongoing renewable energy deflation will mean Adani’s coal plants will be obsolete by the expiry of their PPAs.

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“The value creation of Adani Green Energy and Adani Transmission, and the ongoing value destruction of Adani Power are perfect examples of this energy system disruption.”

Adani Green Energy has seen a 2,400 percent rise since its 2018 IPO – remarkable, said Buckley, for a company that was in an embryonic stage only five years ago. Adani Green Energy’s current market capitalisation of Rs 1.17 trillion (USD 15.6 billion) is 40 percent above that of India’s largest thermal power generator NTPC, a company with 22 times as much capacity.

While committing to a phased move away from coal power would mark a major strategic pivot for the group, it would provide an opportunity to take a national leadership position and accelerate investment aligned with India’s sustainable economic growth, adds Buckley.