• Adani Group founder, Gautam Adani, faces bribery allegations, causing concern in India's renewable energy sector.
• The allegations highlight the difficulties in securing buyers for renewable energy in India, despite government efforts.
• Coal still dominates India's power generation, with renewables making up only 12%.
• The case underscores the need for transparency, accountability, and a strategic approach to meet India's renewable energy targets.

The recent bribery allegations against Gautam Adani, the founder of the Adani Group, have sent shockwaves through India's renewable energy sector. U.S. authorities have charged Adani with devising a $265 million scheme to bribe Indian state government officials to secure solar power supply deals. This comes after one of his companies was unable to secure buyers for a $6 billion project for several years. The Adani Group has categorically denied these charges.

The allegations have brought to light the challenges faced by India's renewable energy developers in finding buyers for the power they generate. Despite the central government's push towards cleaner energy sources like solar and wind, state government-owned power distribution companies have been slow in striking renewable purchase deals. This has resulted in a significant delay in signing up buyers for the renewable electricity capacity being developed in India, the world's third-largest emitter of greenhouse gases.

Coal continues to dominate India's power generation, accounting for 75% of the total in the year ending March 2024. Renewables, excluding hydro-electricity, made up about 12%. India is still more than 10% short of its much-publicised pledge to add 175 gigawatts (GW) of renewable power by 2022.

The Challenges of Renewable Energy Development in India

This shortfall has led the federal government to increase bidding for renewable projects to meet an ambitious 2030 target of increasing its non-fossil fuel capacity to 500 GW. The case of Adani Green, India's largest renewable energy company, exemplifies the challenges faced by the sector. It took the company nearly 3.5 years to strike supply deals with buyers for the entire 8 GW of solar power capacity it won in a tender.

This delay has been attributed to a lack of interest from power distribution companies and changes in the way some tenders are run. The tender won by Adani Green was the first major contract issued by the state-run Solar Energy Corp of India (SECI) without a state-guaranteed Power Purchase Agreement (PPA). When the deal was announced in June 2019, SECI guaranteed buyers, but it withdrew this provision from the deal signed a year later.

This has resulted in a three-fold increase in tendering of renewable projects, leaving 30 GW of projects for which bidding is complete, but without buyers. The allegations against Adani could potentially slow down the renewable sector further, as low-cost finance from foreign investors may become more difficult to secure.

The Need for a Strategic Approach to Renewable Energy

The lack of adequate transmission infrastructure and storage, coupled with a preference for fossil fuel supply over intermittent renewables, has left India's states unprepared for the rapid rise in renewable generating capacity. The situation calls for a more strategic approach to renewable energy projects. Rakesh Nath, former chairman of India's Central Electricity Authority, suggests that knowing how much power buyers want before projects are bid for could minimise delays in signing power supply agreements.

This could be a crucial step towards meeting India's ambitious clean energy targets and reducing its dependence on coal. The Adani case is reminiscent of past instances where corporate giants have faced legal scrutiny. For instance, the Volkswagen emissions scandal in 2015, where the German automaker was found to have installed software in cars to cheat on emissions tests. The scandal led to billions in fines and a significant hit to the company's reputation.