Adani to invest USD 6 billion to build 8 of solar farms

Adani Green Energy Ltd, part of the diversified Adani Group, has won a bid to build 8 GW of photovoltaic solar power projects over the next five years, along with a commitment that will see group company Adani Solar establish 2 GW of additional solar cell and module manufacturing capacity.

This award will entail investment of USD 6 billion and will create 400,000 direct and indirect jobs, the company said in a stock exchange filing. Adani Green Energy will get a fixed tariff of INR 2.92 (3.84 US cents) per kilowatt-hour from the generation capacity over a contract period of 25 years. Over its lifetime, it will reduce carbon dioxide emissions by 900 million tonnes, the company said.

The first 2 GW of solar generation capacity will be commissioned by 2022 and the rest will be added in 2 GW increments every year till 2025. The projects will be in various locations, including a 2 GW single-site generation project, the company said.

The Adani Group will also establish a solar cell and module manufacturing capacity of 2 GW by 2022 as a part of the contract from state-run Solar Energy Corp of India (SECI). Along with its existing 1.3 GW of manufacturing capacity, this will further consolidate the group’s position as India’s largest solar manufacturing facility. The solar factory is expected to be ready by 2022.

The share price of Adani Green has risen by more than 18% to INR 336.45 since it made the announcement last week. Its share price has nearly doubled since the beginning of 2020 in an otherwise-depressed market where investors are worried about India’s economic growth, which has slumped in recent years.

Boosting clean capacity

The contract is part of India’s aim to boost its renewable energy capacity and build domestic capacity for making solar equipment. The country currently imports 90% of its solar equipment.

“This award is yet another step in our nation’s climate change promise to the world as well as enabling our nation’s Atma Nirbhar Bharat Abhiyan (Self-Reliant India Programme),” group chairman Gautam Adani said. “In today’s world, climate adaptation cannot be considered independent of economic development priorities and both job creation as well as decarbonisation must be simultaneous objectives.”

The latest contract will also take Adani Green Energy closer to its target of achieving an installed generation capacity of 25 GW of renewable power by 2025, which will see it committing a total investment of USD 15 billion in the renewable energy space over the next five years.

Adani Green Energy plans to raise up to USD 12 billion through green bonds in the next four to five years, Jugeshinder Singh, chief financial ffficer of Adani Group, told The Economic Times newspaper. “This is consistent with our public commitment of 25,000 MW capacity by 2025.”

The company will also raise USD 5-6 billion through foreign currency bonds to help develop India’s transmission network to cope with renewable power. The proposed sale of green bonds is likely from May next year, with the company raising USD 2-3 billion every year. The green bond proceeds are mandated to be used to produce non-conventional energy.