The Indian renewable energy market is the world's fourth most attractive renewable energy market. As of 2019, India was rated fifth in wind energy, fifth in solar energy, and fourth in renewable energy installed capacity. It is now also set to become a battleground between the two most influential business people in the country: Adani and Ambani.
Mukesh Ambani, the richest man in India, on June 24, announced his bid for the clean energy business many hands to the second wealthiest man of the country Gautam Adani. For years, Adani has been a key player in the renewable energy space of India. The petrochemicals mogul recently informed shareholders that he will invest 750 billion rupees ($10 billion) in clean electricity and fuel over the next three years, describing it as his "most challenging" job.
It doesn't appear to be a large capital commitment from India's most prominent industrialist, especially given that he recently raised $44 billion in financing during a pandemic and cleared his flagship Reliance Industries Ltd.'s $180 billion balance sheet of net debt.
Who has dictated the Renewable Energy industry till now?
Adani Green Energy announced in May that it has signed share purchase agreements with SoftBank Group and Bharti Group for a $3.5 billion acquisition of a 100 percent stake in SB Energy India. After Adani Green Energy Ltd. secured a record deal with SoftBank Group's SB Energy India, India's renewable energy sector is seeing market consolidation.
The deal would be the country's largest acquisition in the renewable energy industry. AGEL will have a total renewable capacity of 24.3 GW and an operating renewable capacity of 4.9 GW as a result of this acquisition.
According to Bloomberg New Energy Finance, ReNew Power, Greenko Energy Holdings, and Adani Green have emerged as India's three largest renewable energy companies, each having comparable characteristics.
Adani's Renewable Energy Venture
According to some analysts, the company has a first-mover advantage, which will help it compete against Ambani's new venture.
Adani Green Energy, which was founded in 2015, has a renewable energy portfolio of 15,390 MW and operations in 11 Indian states. Currently, the company has the capacity to generate 3,023 MW of solar energy, a wind power business with a 497 MW operational capacity, and a 2,290 MW hybrid power project under construction.
Because of its $6 billion purchase of a solar plant in June of last year, the Adani group is already the world's largest solar power operator. The group has bought projects from Lanco Infratech, GMR Group, Avantha Group, and AES Corporation over the years, which have helped it become India's largest thermal power producer.
Could Ambani's announcement be a threat to Adani's place in the industry?
Until now, the two billionaires, who are both from Gujarat, Prime Minister Narendra Modi's home state, have mostly functioned in their own domains. Ambani has a preference for data-driven consumer sectors such as retail and telecommunications, whereas Adani has a preference for infrastructure and utilities.
Ambani's renewable energy plans may easily become as aggressive as his 4G telecom endeavor, which was initially regarded as a random entry into a crowded sector of a dozen competitors by critics. In just five years, Ambani's digital business has amassed over 420 million members, bankrupted numerous rival carriers, and is set to release one of the world's cheapest smartphones in collaboration with Alphabet Inc.'s Google.
Following Ambani's announcement, the share price of Adani Green Energy, the Adani Group's renewables business - which had risen by about 850 percent in the previous year - plummeted, possibly due to fears that the company's future growth would be hampered.
Industry experts predict that Reliance Industries, owned by Mukesh Ambani, will quickly become India's leading green energy company. Experts predict that, in addition to direct competition from Ambani, Adani would face competition from enterprises that will prosper in Reliance's shadow.
"Reliance is expanding its base in domestic manufacturing of solar cells, modules, battery storage, among other things and this will strengthen India's input to clean energy," explained Vibhuti Garg, energy economist at the US-based Institute for Energy Economics and Financial Analysis.
Is there really any competition?
Concerns that Ambani's new company will harm the Adani Group's objectives arise from Reliance Group's success in the telecom sector.
By delivering freebies just a year after its inception, Reliance Jio had a significant impact on its competitors' revenue. While some companies, such as Bharti Airtel, managed to survive the competition, the other two major businesses, Vodafone and Idea, were compelled to merge to form a new organization in order to survive.
Meanwhile, fears are growing that the two billionaires will form a duopoly in the renewable energy industry that would be difficult to dissolve. A duopoly occurs when two corporations own all, or nearly all, of the market for a certain product or service. A duopoly, or market dominated by a limited number of enterprises, is the most basic type of oligopoly. If the two players agree on prices or output, a duopoly might have the same market impact as a monopoly.
Could Amabani be taking on too much?
It's also possible that the wealthy businessman is spreading himself too thin. In e-commerce, Reliance is competing against Amazon.com Inc. and Walmart Inc., and will soon be competing against Xiaomi Corp. with the JioPhone Next, which was custom-built by Google for the 300 million Indians who still use 2G handsets. Then there's the adventure into the strange world of technology services: Ambani not only wants to be the first in India with 5G, but he also wants to sell to other telecom operators around the world, possibly competing with Huawei Technologies Co.