Adani Group's Next Big Leap in Green Energy Sector: 3 Gigafactories in the Making

We've extensively written before about Gautam Adani and the Adani group. If you haven't heard of him or the Adani group (which is probably not possible), here's the best introduction I can give you...

If you had invested Rs 100 each in all of the six Adani group stocks at the start of the bull run we witnessed post the Covid-19 crash, a little over two years later, by September 2022, that money would have turned into Rs 12,136.

That's more than 120 times your money. Not bad, right?

However, if you would have invested that Rs 600 in benchmark indices BSE Sensex or NSE Nifty instead, that Rs 600 would have become Rs 1,326.

Here's how it panned out...

Company Name	07-Sep-22	24-Mar-20	Rs 100 Invested	Becomes
Adani Enterprises Ltd.	129	3,474	100	2,586
Adani Green Energy Ltd.	141	2,346	100	1,561
Adani Ports Ltd.	233	875	100	276
Adani Power Ltd.	28	406	100	1,350
Adani Total Gas Ltd.	82	3,656	100	4,363
Adani Transmission Ltd.	185	3,889	100	1,999
S&P BSE Sensex	26,674	59,029	600	1,326

Source: Equitymaster

We recently covered an editorial on the fastest growing companies in India and guess what, three Adani group stocks top the list.

Such has been the stupendous journey of Gautam Adani as he quickly emerged to become the third richest person in the world.

Earlier this month, the Gujarat based industrialist broke into the top three richest men, trailing only Tesla founder Elon Musk and Amazon's Jeff Bezos.

According to the Bloomberg Billionaire index, Gautam Adani's wealth stands at US$ 143 bn at the time of writing.

This compares with US$10 bn wealth he had when Covid-19 first struck. On a YTD basis, his wealth has risen by US$ 66.3 bn.

Okay, enough about the wealth creation journey of Adani.

Let's get straight to the point and discuss what Gautam Adani spoke recently at an event.

At the event organized by the US Chamber of Commerce's US India Business Council (USIBC), Adani spoke about building gigafactories as part of the group's green energy push.

He gave more details about the group's plan to spend US$ 70 bn by 2030 in India's green energy push.

Adani also spoke about semiconductors, green hydrogen and more.

Read on to know more...

Three gigafactories in the making

Before we elaborate Adani's plan to make three gigafactories, it's important you understand what exactly gigafactories are.

The term 'Gigafactories' was first coined by Tesla and SpaceX CEO, Elon Musk, in 2013. This was in association with the massive lithium-ion battery production facility that Tesla was building in Nevada.

There's no set definition for gigafactories, just like there's no definition for penny stocks in India.

Gigafactories are not just made to create battery cells, but basically, they focus on all the renewable energy solutions.

These factories are capable of end-to-end production of thousands of gigawatts (GW) of energy. Picture the below image which is Tesla's gigafactory in Shanghai:

Coming back to Adani group's gigafactories...

The group said it will build three gigafactories as part of its US$70 bn investment in the green energy space by 2030.

These gigafactories will focus on manufacturing solar modules, wind turbines and hydrogen electrolysers.

Setting up these gigafactories will result in generating additional 45 GW of renewable energy to Adani group's existing capacity of 20 GW and additional 3 million tons of hydrogen.

The size of these gigafactories or their location are yet to be shared.

Via its subsidiary Adani Green Energy, the Adani group has the largest renewable company in India, with a current portfolio of 20 GW.

Ambani and his five gigafactories

Gautam Adani's plan to create three gigafactories comes days after Mukesh Ambani announced his fifth gigafactory.

At Reliance Industries' AGM, Ambani revealed to create a fifth gigafactory for power electronics.

In previous year's AGM, Ambani had announced to create four gigafactories for solar PV modules, electrolyzers that produce hydrogen from water, fuel cells and batteries to store energy from the grid.

For years, both the conglomerates saw their empires grow slowly by venturing into different fields. They did not directly compete against each other and became dominant in the fields they operated in.

But now, after steering away from each other for years, they are on course to compete directly with each other.

Ambani's gigafactories will commence production as soon as 2023 while Adani's gigafactories are expected to complete by 2030.

Ambani's module factory at Jamnagar will commence production by 2024 while the group will start making battery packs as soon as end of 2023.

Adani's US$70 bn green energy push

In July 2022, the Adani group committed to invest US$70 bn in the green energy transition and infrastructure projects to become a net exporter of clean energy.

Here's what Gautam Adani said at yesterday's event:

• There has been a lot of talk about developed nations supporting developing nations, but far more needs to be done-urgently-in terms of partnering in this space.
  
  Cooling the planet down is necessary and can be one of the most profitable businesses over the next several decades.

There is no doubt that the power demand is likely to grow sustainably. Driven by rapid urbanisation and infrastructure development, a growing economy like India will always have a high demand for power.

With a dominant portfolio of operational projects and projects under construction, the Adani group is making sure it does not miss any Indian region.

On semiconductors...

Apart from clean energy, Adani also spoke about semiconductors, the hottest trend in the equity market today.

Adani said that the semiconductor industry is another critical sector where India needs to build domestic capabilities.

He added that the industry is a classic example where more engineers deployed in India than anywhere else in the world, and yet, India has no semiconductor plant.

• India cannot remain dependent on global supply chains that are based on semiconductor nationalism and will need US support with technology transfer.

Currently, India meets its semiconductor requirements through imports.

But this is set to change soon as India becomes a global hub. The Indian government has already lined up a host of initiatives for local semiconductor manufacturing.

The companies involved in this space directly or indirectly are still very few. This can change very quickly.

The Adani group has not talked about foraying into semiconductor space yet.

Final words

Even though rivals Adani and Ambani compete against each other, they share one common goal - to make India a global hub for different industries and heavily cut dependence from global counterparts.

Both conglomerates are planning to produce the world's cheapest green hydrogen.

Given their capabilities in large-scale renewables infrastructure, both the groups are well-positioned to become the largest producers of green hydrogen globally.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...