In a controversial decision, President Donald Trump’s suspension of a law prohibiting overseas business bribes may provide a major relief for Indian billionaire Gautam Adani. This move could potentially shield Adani from U.S. corruption allegations tied to a significant solar initiative in India.
Prosecutors in the United States assert that an Adani company misled investors by not disclosing a $265 million bribery scheme backing its project. This ongoing case may now be reassessed, and the final outcome and enforcement remain in question. Nevertheless, the situation has drawn attention to the issues plaguing India’s solar energy sector, which is crucial for its energy transition and efforts to mitigate climate change while countering severe city pollution.
The Adani Group, which operates across diverse sectors from energy and ports to media, refutes these allegations from the U.S. No comments were received from the company when approached. Earlier this month, Trump’s decision to freeze the Foreign Corrupt Practices Act spurred hopes among some Indian circles that the Adani-related charges might be delayed, leading to a temporary increase in Adani’s stock values. However, this was reversed following actions by the U.S. Securities and Exchange Commission, which sought assistance from Indian authorities to proceed with their complaints against Adani.
These allegations have had international consequences, with Adani Green Energy retreating from wind energy projects in Sri Lanka and Kenya pulling back on energy and airport contracts with them. Additionally, the French oil giant TotalEnergies has put a pause on fresh investments with Adani.
As India’s premier renewable energy firm, Adani Green Energy (AGEL) is working on a gigantic clean power project situated in the Gujarat salt deserts near Pakistan. Once operational, it aims to generate a dazzling 30 gigawatts of clean power, sufficient for about 18 million Indian residences.
With projects spread across 12 Indian states, AGEL has already built an impressive 11.6 gigawatts of renewable power capacity. The company’s ambitious goal is to reach 50 gigawatts by 2030, marking a substantial part of India’s overarching clean energy targets.
Adani previously announced plans to allocate $35 billion over five years to advance large solar, wind, and hybrid power stations nationwide. Though Adani symbolizes one of India’s few large-scale producers in solar and wind components, the sector as a whole grapples with issues.
India’s state electricity boards often suffer severe cash shortages, estimated with losses of $7.8 billion in 2022-2023, representing 2.4% of the national GDP. Operational setbacks from poor planning, resistance to electricity rate hikes, and big transmission losses exacerbate the situation.
Professor Rohit Chandra of the Indian Institute of Technology in New Delhi emphasizes that while waiving initial costs simplifies setup for power plants, the system shoulder these costs eventually. Additionally, adjusting for inherent renewable power variability remains expensive due to the necessity of coal power back-up.
Despite being more economical than coal, renewable energy remains secondary for utilities, viewed as a “statutory obligation,” according to energy analyst Alexander Hogeveen Rutter.
After recognizing the financial strain, the federal body Solar Energy Corporation of India (SECI) aims to mitigate risks for state utilities. SECI entrusted Adani Group and another NYSE-listed company, Azure Power, with a contract for 12 gigawatts of solar energy at a set price. According to U.S. accusations, the promise of buying power faced resistance, spurring a bribery attempt to finalize deals.
Azure Power has been cooperating with U.S. agencies and declared the termination of any personnel linked to the indictment, while SECI did not provide comments.
Import restrictions on cheaper Chinese solar equipment and subsidies for Indian manufacturers led to a production increase but made local solar components pricier, compared to Chinese ones. Moreover, India lags in rooftop solar compared to nations like Brazil and Australia.
Large companies like Adani typically manufacture their solar tools to reduce costs, though this minimizes competitive balance as smaller firms can’t compete with the higher prices demanded by state utilities. These arrangements strain small companies, deemed essential for India’s clean energy endeavor, as said by energy economist Vibhuti Garg.
The indictment reveals India’s regulatory system’s deficiencies, subject to “crony relationships,” stated Joe Athialy, executive director of the Centre for Financial Accountability. Many publicized government contracts reduce prices to unsustainable levels but expose opportunities for back-door dealings or overlooked competitive practices.
For a country like India, housing 1.4 billion people as of 2023, a slow shift from fossil fuels is pivotal. India’s electricity demand is projected to grow at 6% annually in the succeeding years, according to the International Energy Agency. Although record-breaking solar power additions are expected in 2024, solar only represents 16% of India’s core generating abilities, supplying a mere 4% of the electricity consumed, compared to a global benchmark of over 5% in 2023 by the think tank Ember.
By the end of 2024, SECI had not fully engaged buyers for 9 gigawatts or roughly a third of the 24.5 gigawatts it offers. Limited storage capacity hinders solar ventures from securing clients, as utilities continue to favor stable power. This dynamic explains why only a fraction of the previous year’s solar projects found buyers compared to 44% the preceding year.
“India’s saga in solar energy, though still advancing, is decelerating,” concluded Chandra.
