Inside billionaire Gautam Adani’s $70bn pledge

Adani firms have raised almost $1.1bn in green and sustainability-linked dollar bonds in 2021

LUCKNOW, INDIA - FEBRUARY 21: Gautam Adani, chairman and founder of Adani Group at the inaugural session of the UP Investors' Summit - 2018 at the Indira Gandhi Pratishthan, on February 21, 2018 in Lucknow, India. PM Modi said that investors in Uttar Pradesh will be welcomed with a red carpet instead of facing red tape in Uttar Pradesh as top industry leaders pledged investments of over Rs 88,000 crore in the state. The Summit is aimed at showcasing the investment opportunities and potential in the various sectors of Uttar Pradesh. The UP Investors' Summit is being attended by around 5,000 people, including industry leaders from India and abroad, chief ministers, union ministers, policy makers and academicians. (Photo by Subhankar Chakraborty/Hindustan Times via Getty Images)

Billionaire Gautam Adani wants his conglomerate to be a world leader in green data storage, with data centres run entirely on clean power playing a key part in his ambition to recast an empire built largely on coal mining and trading into a renewable energy giant.

“It is inevitable that massive data centre infrastructure will become the largest energy-consuming industry to ever exist,” Mr Adani, chairman of Adani Group and Asia’s second-richest person, said at the Bloomberg India Economic Forum on Thursday. As India exponentially expands its clean energy capacity at one of the lowest costs, it “will make us the greenest choice to warehouse not just India’s but perhaps much of the world’s data.”

The conglomerate has committed to invest a total $70 billion by 2030 across its green energy value chain to become the world’s largest renewable energy producer. It is one of the two biggest tailwinds behind Prime Minister Narendra Modi, who made a surprise pledge at Cop26 for India to touch net-zero carbon emissions by 2070. Reliance Industries, helmed by Asia’s richest man Mukesh Ambani, plans to spend $10bn on renewables over the next three years.

Mr Adani will face multiple challenges in powering data centres as they require a continuous 24-7 power supply, according to Shantanu Jaiswal, BloombergNEF’s head of India research. “Adani must invest in storage of renewable energy or find other sources to ensure uninterrupted power supply when the sun isn’t shining or the wind breeze is weak,” Mr Jaiswal said.

Notwithstanding the hurdles, Mr Adani, 59, sees a booming demand for data centres as ultra-speedy 5G services, quantum computing, and cloud storage applications expand. Digital transactions also got a massive boost during the Covid-19 pandemic that forced people to work, study and shop from home. India is becoming a hot market for providing data storage services to global firms such as Amazon.com and Alphabet’s Google amid a rapid surge in smartphone usage and cheap mobile data tariffs.

‘Hard to Replicate’

“The Adani Group is well-positioned to benefit from this trend given our ability to build data centres, connect data centres, and provide 100 per cent green power to data centres – a provision that will be hard to replicate at an economic scale elsewhere in the world,” the tycoon said.

The Adani conglomerate is rapidly ramping up its solar energy portfolio and its ports business aims to be carbon neutral by 2025. Adani firms have raised almost $1.1bn in green and sustainability-linked dollar bonds in 2021, and another $1.35bn in offshore loans – making them the biggest issuers of ESG [environmental, social and governance] debt from India, data compiled by Bloomberg show.

“We are doing all we can to make renewables a viable, affordable alternative to fossil fuels,” said Mr Adani, a first-generation entrepreneur who started off as a diamond trader in Mumbai in the 1980s, then helped run his brother’s plastics business in his home state of Gujarat, before setting up Adani Enterprises – the group’s flagship company – as an agri-commodities trader in 1988.

Runaway Rally

Adani Enterprises rose as much as 2.1 per cent in Mumbai on Friday, pushing this year’s runaway rally to more than 250 per cent. Adani Green Energy advanced as much as 2.9 per cent, taking its climb to almost 20 per cent in 2021.

In the past two decades, the group has rapidly diversified into ports, power generation and distribution, airports, data centres, and digital services. The tycoon has added $52bn to his net worth this year – one of the biggest gainers in 2021 – pushing his wealth to almost $86bn, according to the Bloomberg Billionaires Index.

Mr Adani’s sustainability claims, however, are criticised by climate campaigners who point to the group’s Carmichael coal mining project in Australia, which will expand supplies of the highly polluting fossil fuel. The Adani Group opted to self-fund after having trouble in securing external funding and is targeting the first shipment by the end of this year.

‘Miracle Fuel’

Adani also spoke about his group being well-positioned to produce the world’s cheapest green hydrogen, calling it “a miracle fuel and a miracle feedstock” which can disrupt many industries such as the chemicals and metals sectors. Ambani’s Reliance too is aiming for green hydrogen at $1 a kilogram by the turn of this decade – a price that could threaten fossil fuels.

“Indian billionaires understand the importance of green hydrogen for deep decarbonisation of the economy,” said Rohit Gadre, an analyst at BloombergNEF, adding that Mr Adani will face intense competition from home-grown as well as global rivals in its pursuit of pole position as the world’s top renewable power producer.

The Adani group has been adding muscle to its renewable portfolio. In May 2021, it paid $3.5bn to buy SoftBank Group's local clean energy unit as it gets closer to its goal of having 25 gigawatts of renewable power capacity by 2025, up from an installed capacity of 5.4 gigawatts currently.

The conglomerate “has had an early start and our portfolio includes increasingly green ports, green airports, green power, and green transmission”, Mr Adani said. “No other company has yet made so large a bet on developing its sustainability infrastructure.”

Updated: November 12th 2021, 4:39 PM
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