Adani Power’s Strategic Expansion in Bihar and Its Impact on Long-Term Earnings

The recent award of a $3 billion greenfield thermal power project to Adani Power in Bihar represents a pivotal moment in India’s energy infrastructure and the company’s long-term earnings trajectory. This 2,400 MW ultra-supercritical plant, to be developed under a design, build, finance, own, and operate (DBFOO) model, underscores Adani Power’s strategic alignment with India’s energy security goals while navigating the financial and operational challenges of coal-based power generation in a decarbonizing world.

Financial and Operational Implications

The project’s scale—$3 billion in investment and 2,400 MW of capacity—positions Adani Power to significantly expand its generation portfolio. The plant will supply 2,274 MW of electricity to Bihar’s distribution companies under a 25-year power purchase agreement at a competitive rate of ₹6.075 per KWh, the lowest in the state’s recent competitive bidding process [1]. This pricing advantage, combined with the DBFOO model’s long-term revenue visibility, reduces exposure to short-term market volatility and ensures stable cash flows.

However, the project’s financial viability hinges on Adani Power’s ability to manage its debt burden. The company’s debt-to-equity ratio currently stands at 68.48%, with an interest coverage ratio of 4.84, indicating manageable but not robust leverage [2]. The $3 billion investment will likely deepen this leverage, necessitating disciplined cost management and timely commissioning. The first unit is scheduled for 2029, with the final unit operational by 2030 [3], aligning with India’s urgent need to address power shortages in energy-deficient states like Bihar.

Strategic Alignment with India’s Energy Transition

While coal remains central to India’s energy mix—accounting for 70% of electricity generation in 2024—the government’s push for 50% non-fossil fuel-based capacity by 2030 creates a paradox for Adani Power. The company’s dual strategy of expanding coal-fired capacity while investing in renewables (targeting 50,000 MW by 2030) reflects this tension [4]. The Bihar project, however, is justified by the immediate need to meet rising demand. Bihar’s industrialization and population growth require reliable, low-cost power, and Adani’s ultra-supercritical technology—more efficient than traditional coal plants—mitigates some environmental concerns [5].

Long-Term Earnings Potential

The Bihar project is a cornerstone of Adani Power’s ambition to reach 31 GW of generation capacity by 2030 [6]. With the plant contributing 2,400 MW, the company’s existing 18.1 GW coal-fired capacity, and its renewable energy pipeline, Adani Power is poised to dominate India’s energy transition. The 25-year PPA with Bihar’s distribution companies provides a predictable revenue stream, critical for attracting long-term financing. Moreover, the project’s job creation potential—10,000–12,000 direct and indirect roles during construction and 3,000 operational jobs—bolsters local economic support and political stability [7].

Yet risks persist. Coal supply under the SHAKTI Policy must remain stable, and regulatory delays in commissioning could strain liquidity. Additionally, global climate pressures and India’s net-zero pledges may eventually curtail coal’s role, though the immediate demand for energy security ensures its relevance for the next decade.

Conclusion

Adani Power’s Bihar project exemplifies the delicate balance between short-term energy needs and long-term sustainability. By leveraging its financial strength, technological efficiency, and strategic partnerships, the company is well-positioned to capitalize on India’s energy transition while navigating the inherent risks of coal-based power. For investors, the project offers a compelling case of growth in a sector critical to India’s development, albeit with the caveat that macroeconomic and environmental shifts could reshape its trajectory.

Source:
[1] Adani Power wins $3-b Bihar thermal project [https://m.economictimes.com/industry/energy/power/adani-power-wins-3-b-bihar-thermal-project/articleshow/123172605.cms]
[2] Adani Power Limited (ADANIPOWER) Financials: Ratios [https://www.tipranks.com/stocks/in:adanipower/financials/ratios]
[3] Adani Power Announces 2.4 Gw Coal-Fired Plant Worth Us$3Bn In Bihar [https://www.megaproject.com/news/powerplant/adani-power-announces-2-4-gw-coal-fired-plant-worth-us-3bn-in-bihar-india]
[4] Adani Wins Bid for $3 Billion Coal-Fired Power Plant in Bihar [https://www.bloomberg.com/news/articles/2025-08-07/adani-wins-bid-for-3-billion-coal-fired-power-plant-in-bihar]
[5] Adani to build largest private coal plant in India [https://www.argusmedia.com/en/news-and-insights/latest-market-news/2719128-adani-to-build-largest-private-coal-plant-in-india]
[6] Adani Group's Revenue Goes Up By 7%, Gautam Adani Announces Big Capex Plan [https://www.ndtv.com/india-news/adani-groups-revenue-goes-up-by-7-gautam-adani-announces-big-capex-plan-8746906]
[7] Adani Power to build $3 bn thermal plant in Bihar after ... [https://m.economictimes.com/industry/energy/power/adani-power-to-build-3-bn-thermal-plant-in-bihar-after-winning-2274-mw-supply-contract/articleshow/123154912.cms]