Is Tata copying Adani, Reliance with its green turn?

The moment one lands on the website of Tata Power, one of India's biggest integrated power companies and part of the $311 billion Tata Group, they are greeted with a banner that encourages customers to embrace renewable energy and 'Do Green'. Indeed, going green is at the forefront of most businesses' plans for the future, including those by India's top business groups like Reliance Industries and the Adani Group. 

Tata Group too is making a transition towards sustainability across businesses and will soon announce its goal towards becoming carbon neutral.

As the world pledges efforts check global warming, realising its dangers, India too promised to cut emissions. Only recently, PM Narendra Modi committed to the world a set of climate targets to be achieved by 2030 and big conglomerates sniffed business opportunities in this drive.

Tata Motors said in October last year that it would form a new subsidiary for its electric vehicle business and invest $2 billion for new models, dedicated battery electric vehicle platforms, charging infrastructure and battery technologies.

The EV unit raised $1 billion from TPG’s Rise Climate Fund and Abu Dhabi state holding company ADQ at a valuation of $9.1 billion.

With its Nexon and Tigor models, Tata Motors dominates EV sales in India with a 70% market share. It is also developing hydrogen fuel cell powered buses.

Chairman N Chandrasekharan recently said the group is drawing up plans to manufacture batteries for electric vehicles, as part of a broader plan to be "future ready" by investing in renewable energy, hydrogen, storage solutions and the circular economy.

In 2019, Tata Chemicals operationalised a pilot plant for Li-ion battery recycling. Last week, Tata Power said it would spend $9.5 billion in the next five years to expand the capacity of its renewable energy business and increase its share in the overall portfolio to 60% from 34%.

The company holds a strong leadership position in various renewable sub-segments, including solar EPC, solar pumps and EV charging. It is also setting up a 4GW solar cell and module manufacturing plant in Tamil Nadu at an investment of $380 million.

Speaking to Business Standard, Mayuresh Joshi, Head of Equity Research, William O'Neil India says Tata power is not an exception in making huge green capex plans. It maps govt vision and ESG norms. In fact, every company is taking carbon neutrality seriously.

Tata Group’s moves will put it in competition with Mukesh Ambani’s Reliance Industries, which earlier this year, announced plans to invest $76 billion toward clean energy projects. Reliance wants to build a fully integrated end-to-end renewables energy ecosystem. The company will set up four ‘giga factories’ to make integrated solar PV modules, hydrogen electroysers, fuel cells and batteries to store energy from the grid. Given Reliance has limited expertise in the technology required for such manufacturing, it has invested over $1.5 billion over the last year across new energy partnerships and acquisitions.

Reliance will be in the race with the Adani Group to become the world’s largest as well as the cheapest producer of green hydrogen. Led by India’s richest man Gautam Adani, the eponymous group has committed to invest $70 billion by 2030 across its green energy value chain as it aims to become the world’s largest renewable energy producer.

The group plans to triple its renewable power generation capacity, power its data centres with renewable energy, and make its ports carbon-neutral. Last month, French energy major TotalEnergies bought a 25% stake in Adani New Industries to create th e world’s largest green hydrogen ecosystem. Last year, Total spent $2.5 billion acquiring 20% of Adani Green Energy and a 50% stake in a portfolio of solar assets.

Mayuresh Joshi, Head of Equity Research, William O'Neil India, says RIL, Adani, Tata know that clean and green is way forward. Investors may shun companies that don’t perform well on ESG, he says. Low cost green energy producers will have export opportunities.

Low carbon technologies like green hydrogen could create a market worth up to $80 billion in India by 2030.

As the global energy transition gains momentum, Indian companies too, especially those in highly polluting industries like energy and oil, are making commitments that are in national, global and investor interest. 

They are increasingly adopting policies and targets that contribute to achieving the United Nations' Sustainable Development Goals, one of which is to ensure access to affordable and clean energy by 2030.

A race is underway among the largest companies to see who can make the transition to clean energy faster. Low carbon technologies like green hydrogen could create a market worth up to $80 billion in India by 2030.

As former Bank of England Governor Mark Carney put it  - the transition to net zero carbon economy “is creating the greatest commercial opportunity of our age". Companies that are part of the solution will be rewarded and the ones who lag behind will be punished.