"US Legal Troubles for Tycoon Adani Expose Shortcomings in India's Booming Solar Sector"

The legal troubles of Gautam Adani, the billionaire chairman of Adani Group, have cast a long shadow over India's renewable energy sector, particularly the solar industry. The US Department of Justice's (DOJ) allegations of a $250 million bribery scheme to secure solar power contracts have sent shockwaves through the industry, exposing vulnerabilities in the tendering process and raising questions about corporate governance and transparency.

The Adani Group has denied the allegations and vowed to seek all possible legal recourse. However, the gravity of the charges has taken India Inc by surprise, given the sheer range of Adani's activities—from ports and airports to coal mining, power, data centers, and defense production. The legal proceedings are likely to be protracted, which could lead to delays in project implementation and undermine investor confidence in future renewable energy initiatives.

The US legal case could alter not just Adani's fortunes but also India's solar industry. The economics became “messy,” as reported by Bloomberg News, when New Delhi decided to offer generating capacity to bidders that promised to build factories to produce panels as well. This has skewed the field in favor of large players like Adani, the country’s No 1 renewables developer, and introduced opacity in pricing. Now that the bribery charges have gone to a US court, bankers, bondholders, and partners would be cautious to finance mega projects where price discovery of power has any chance of becoming a political hot potato.



The impact on India’s energy business – at the heart of the kickback allegations – may be more far-reaching. Adani is building a renewable-power park five times the size of Paris. The US legal case could alter not just his fortunes but India’s solar industry as well. The practice of lining up generators before finding willing buyers hasn’t worked out well. According to the DOJ indictment, the high energy prices contemplated in the tender awards put off state-owned distribution utilities and created potential for graft.

The legal troubles could also impact Adani's competitors in the renewable energy sector. The Indian government may need to intervene to prevent the entire industry from getting caught in the expanding gyres of the scandal. This could involve going back to its earlier practice of simple tenders with transparent pricing or finding a different model for renewable energy. There is speculation Mukesh Ambani, the only other Asian richer than Adani, may try to upend power distribution by letting customers install micro-grids free of cost, and recover costs later.

The Institute for Energy Economics and Financial Analysis (IEEFA) report highlighted the need for the government to give balanced attention to every stage of the tendering process, starting from the release of requests for selection to the allocation and signing of Power Sale Agreements (PSAs). It also underscored the need for stricter regulations regarding renewable purchase obligations and related penalties to maintain demand for renewable energy.

The challenges highlight the struggles faced by India's renewable energy sector as the government targets at least 500 GW of non-fossil power capacity by 2030, up from 165 GW currently. India has also fallen short of its previous goal of adding 175 GW by 2022, with fossil fuels accounting for more than two-thirds of the total power generation last year. The country added nearly 28 GW of solar and wind capacity in 2024, with solar power additions accounting for 70% of the total, according to the renewable energy ministry.

In summary, while a reduction in Adani's influence could lead to a more competitive and balanced solar industry, it also poses risks related to project financing, investor confidence, and the need for government intervention to maintain the momentum of India's renewable energy goals. The legal troubles of Gautam Adani have exposed shortcomings in India's booming solar sector, and it remains to be seen how the industry will adapt to these challenges in the coming years.