All Eyes on Ambani and Adani to Deliver India’s Green Goals


India’s green-energy goals hinge on the success of two of the country’s billionaires,

Mukesh Ambani

and

Gautam Adani,

as they pivot their business empires toward renewable energy.

Last week,

Reliance Industries,


500325 -0.64%

helmed by Mr. Ambani, said it will consider doubling its investment in clean-energy hardware manufacturing, once current plans are achieved. India’s most valuable company previously unveiled plans to build four giant factories in India, for production of photovoltaic panels, energy storage, electrolyzers for green hydrogen, and fuel-cell systems. It has now announced a fifth facility: a power electronics plant, to make the equipment used to link up new-energy systems.

Reliance is diversifying away from its oil-refining and petrochemicals businesses—the lifeblood of the conglomerate. Mr. Ambani and Mr. Adani, founder and chairman of the Adani Group, have said they intend to invest more than $140 billion in green industries in the next 15 years. Green hydrogen—hydrogen produced with renewable energy—is at the center of these plans. Successful execution would help India achieve carbon neutrality by 2070 and reduce vulnerability to external energy shocks.

A lot depends, however, on these companies successfully bringing down production costs for green hydrogen so it can become a viable alternative to conventional fuels—like what happened over the past decade with solar, thanks largely to China’s massive manufacturing build-out.

The International Energy Agency put global production costs of green hydrogen at $3 to $8 a kilogram in 2021. Messrs. Ambani and Adani think they can bring it down to $1 within the next 10 years. India itself offers incentives such as free transmission of renewable electricity from one state to another for the production of hydrogen and ammonia. India has the world’s 10th largest green hydrogen production pipeline, according to Rystad Energy. Nonetheless, India is far from alone in its ambitions: plans are popping up all over the world, including in places as far-flung as Mauritania and Papua New Guinea.

Minh K Le, head of hydrogen research at Rystad, thinks Reliance and Adani are in a somewhat unique position globally to be able to control costs as they want to set up the whole hydrogen supply chain, complete with production of solar panels and electrolyzers. But he still sees the cost targets as quite aggressive. To succeed they will need to scale up their renewable power production capacity rapidly.

They will certainly have a fighting chance. India, the world’s third-biggest emitter of greenhouse gases, has established itself as one of the world’s largest renewable-energy markets—and its rising power demand and government support for green power makes it the most attractive investment destination for renewables among emerging markets, according to a 2021 report by Climatescope.

Last week, Mr. Ambani said Reliance aspires to make India a credible alternative to China in new-energy manufacturing. While that may be many years away, it would be a huge leg up for India—to say nothing of Reliance itself—if it succeeds.

Write to Megha Mandavia at megha.mandavia@wsj.com

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