Will bribery accusations hamper India's renewable energy goals?

Bribery charges brought by a US court against Adani Group are unlikely to significantly impact India's clean energy goals, industry leaders told the BBC.

New Delhi has pledged to source half of its energy needs, or 500 gigawatts of electricity, from renewable sources by 2032, which is key to global efforts to combat climate change.

The Adani Group is scheduled to contribute a tenth of this capacity.

the Legal problems in the United States Analysts say this may temporarily delay the group's expansion plans, but will not affect the government's overall goals.

India has made impressive strides in building clean energy infrastructure over the past decade.

The country is growing “at the fastest rate among major economies” in adding renewable energy capacity, according to the International Energy Agency.

Installed clean energy capacity has increased five-fold, with about 45% of the country's power generation capacity – nearly 200 gigawatts – coming from non-fossil fuel sources.

A former chief executive of a rival company, who preferred to remain anonymous, said the charges against Adani Group – which is essential to India's clean energy ambitions – are “like a passing dark cloud” and will not meaningfully affect the momentum.

Gautam Adani pledged to invest $100bn (£78.3bn) In India's energy transition its green energy arm is the country's largest renewable energy company, producing nearly 11 gigawatts of clean energy through a variety of wind and solar projects.

Adani aims to take this to 50 GW by 2030, which would constitute nearly 10% of the country's installed capacity.

More than half of this amount, or 30 gigawatts, will be produced in Kavda in the western Indian state of Gujarat. It is the world's largest clean energy plant, expected to be five times the size of the city of Paris, and is the centerpiece of Adani's renewable energy crown.

But other renewable energy facilities belonging to KAFDA and Adani are now at the center of charges brought by US prosecutors – who allege the company won contracts to supply power from these facilities to government distribution companies, in exchange for bribes to Indian officials. The group denied this.

But the company-wide ramifications are already becoming clear.

When the indictment became public, Adani Green Energy immediately canceled a $600 million bond offering in the United States.

French company TotalEnergies, which owns 20% of Adani Green Energy and has a joint venture to develop several renewable energy projects with the group, said it would stop injecting new capital into the company.

Since then, major credit rating agencies – Moody's, Fitch and S&P – have changed their outlook on Adani group companies, including Adani Green Energy, to negative. This will impact the company's ability to access funds and make raising capital more expensive.

Analysts have also raised concerns about Adani Green Energy's ability to refinance its debt, as international lenders become wary of increased exposure to the group.

Global lenders such as Jefferies and Barclays are already said to be reviewing their relationships with Adani even as the group's reliance on global banks and international and domestic bond issues for long-term debt grows from barely 14% in fiscal 2016 to nearly 60% with the date, according to a note from Bernstein.

Japanese brokerage Nomura says new funding may dry up in the short term, but should “gradually resume in the long term.” Meanwhile, Japanese banks such as MUFG, SMBC and Mizuho are likely to continue their relationship with the group.

The unnamed CEO said the “reputation and sentiment impact” will fade within a few months, as Adani builds “strong strategic assets and creates long-term value”.

An Adani Group spokesperson told the BBC that it is “committed to its 2030 targets and is confident of delivering 50 GW of renewable energy capacity.”

Adani shares have recovered sharply from the lows they reached after the US court indictment.

Some analysts told the BBC that a potential slowdown in Adani's financing could actually benefit its rivals.

While Adani's financial clout has allowed it to expand rapidly in the sector, rivals such as Tata Power, Goldman Sachs-backed Renew Power, and Greenco State-run NTPC Ltd is also working to significantly increase manufacturing and generation capacity.

“This is not to say that Adani is a champion of green energy,” said Tim Buckley, director of the Climate Energy Finance Corporation. “She is a big player who has walked both sides of the road, being the largest private developer of coal plants in the world.”

He added that the presence of a large entity that is “perceived as corrupt” may slow its expansion, and could mean that “more money will start flowing to other green energy companies.”

According to Vibhuti Garg, South Asia Director at the Institute of Energy Economics and Financial Analysis (IEEFA), market fundamentals also remain strong with demand for renewable energy outstripping supply in India – which is likely to maintain appetite for large investments.

What may actually be slowing down India's clean energy ambitions is its bureaucracy.

“The companies we track are very optimistic,” says Garg. “Finance is not an issue for them. Rather, it is the regulations at the state level that act as a kind of deterrent.”

Most state-run power distribution companies still face financial constraints, opting for cheaper fossil fuels while delaying signing offtake agreements.

according to ReutersThe controversial tender won by Adani was the first major contract issued by the state-run Solar Energy Corporation of India (SECI) without a secured offtake agreement from distributors.

The head of SECI told Reuters that there are 30 gigawatts of operational green energy projects on the market without buyers.

The 8-gigawatt solar contract at the heart of the U.S. Adani indictment also highlights a chaotic bidding process, which required solar generating companies to also manufacture modules — limiting the number of bidders and driving up energy costs, experts say.

Garg says the court's indictment will certainly lead to a “tightening of bidding and tendering rules.”

Buckley agrees that a clean bidding process that reduces risk for both developers and investors will be important in the future.

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