• What is Green Hydrogen, benefits and economic impact. Who are the India Inc Players? Should SC be involved in Adani matter? How do Adani Group share prices compare to 52 week high/lows?   

In the noise about Adani Group (AG) share prices the need for and importance of Green Hydrogen (GH) is being missed. This article focuses on GH. An earlier article had Ideas for the AG on how to deal with matters post the Hindenbur report.

This article covers what is GH, its benefits, which private companies are investing in GH, is the Hindenburg report an attack on India, should SC be involved in Adani matter and share prices of Adani companies.

Instead of focussing solely on the AG, one must look at the big picture.  In the coming decade India has to meet the twin challenges of economic progress and reducing dependence on fossil fuels (currently India spends over $ 160 billion p.a. on energy imports).

The latter is important to meet global climate change targets notwithstanding that India’s CO2 emissions in 2020 are far lower than other countries for e.g. China is 11680, USA is 4535 and India 2412. India does not feature in the List of Top 15 countries with the Highest CO2 emissions per capita. Source    According to this Hindustan Times  report, “In 2021, more than half of the world’s CO2 emissions were from three places -- China (31 percent), the US (14 percent) and the European Union (8 percent). India accounted for 7 percent of the global CO2 emissions, according to the report.”

Actually India has to build its industry, reduce poverty and cut emissions simultaneously. Thus, “India is really the first example of the leapfrog that developing countries would have to take into a lower-carbon energy system but also development model,” said Thomas Spencer, an analyst at IEA who models power sectors.” Source Scientific American Why climate change will fail without India  This even as India continues to build coal based power plants.

India can crib about multiple goals or think big and make giant strides for which she needs resources to build its industry, infrastructure and shift to green energy. She needs low cost funding from the industrialised nations for the shift and or attractive local instruments to raise money domestically. 

An important component of shift from fossil-fuels is GH. 

“GH is hydrogen that is produced by splitting water into hydrogen and oxygen by using electricity generated from renewable sources of energy. Most of the world’s hydrogen is made using fossil fuels, especially natural gas.” Source

Solar energy panels, Brahma Kumaris, Abu road.  

What is the National Green Hydrogen Mission?

“The intent of the mission is to incentivise the commercial production of green hydrogen and make India a net exporter of the fuel. The mission has laid out a target to develop green hydrogen production capacity of at least 5 MMT (Million Metric Tonne) per annum.” Source Mint 

Just recently the Union Cabinet approved a, “Rs 19,744 crore National Green Hydrogen mission that aims to make India a ‘global hub’ for using, producing and exporting green hydrogen.”

Those fighting for combating climate change must support the GH Mission.

What are the advantages of Green hydrogen?

“One, it is a clean burning molecule that can decarbonise a range of sectors including iron and steel, chemicals, and transportation. Two, renewable energy that cannot be stored or used by the grid can be channeled to produce hydrogen.” Source Indian Express

Hydrogen can contribute to India’s energy security and long-term competitiveness.

What is the economic impact of shift to Green Hydrogen?

According to this report in Mint, benefits of the National Green Hydrogen Mission are, “This will entail the decarbonisation of the industrial, mobility and energy sectors; reducing dependence on imported fossil fuels and feedstock; developing indigenous manufacturing capabilities; creating employment opportunities; and developing new technologies such as efficient fuel cells.”

“Green hydrogen could eventually potentially replace fossil fuels and fossil fuel-based feed stocks in fertiliser production, petroleum refining, steel production, and transport applications.” Indian Express This will reduce cost.

Reduction in fossil fuel imports will reduce India’s current account deficit, positively influence exchange rates and enhance India’s status geopolitically. Simply put money that is flowing outside India to pay for imports will now be spent within the country. Think of the multiplier effect of such spending.   

In an interview to Hindustan Times, Francesco La Camera, director-general of the International Renewable Energy Agency said, “India already has some 700,000 jobs in the renewable energy sector today. In 2030, it could grow to 3.5 million jobs.” 

If India realizes potential to become a GH production hub, possibilities are enormous.

Wind turbines near Jaisalmer, Rajasthan. 2013. 

What is holding its consumption back?

The problem is that the cost of GH today in India is app Rs 350 to 400 per kg. Reliance Industries Limited (RIL) wishes to reduce cost to $ 1 although it may be priced at $ 2 initially. Thus, reduction of cost is what, “The Hydrogen Energy Mission aims for. With implicit subsidy support and a government-backed R&D push, the plan is to target lower costs of renewable power generation and to bring down the costs of electrolysers to make the production of green hydrogen cost-competitive.” Indian Express

Renewal energy is power generated from solar and wind. To reduce cost of generation solar modules etc would need to be built in India. That is what Indian companies are aiming for.

Which companies are in the GH space?

“India will need $150 billion a year by 2030, roughly three times more than now, to meet its climate targets, according to IEA.” 1 The shift to GH has to be funded by the government and private sector with the latter playing a bigger role.

According to this Business Today report, “The four Giga factories of RIL will include an integrated solar photovoltaic module factory, an advanced energy storage battery factory, an electrolyser factory for the production of GH, and a fuel cell factory for converting hydrogen into motive and stationary power.” RIL does not have solar units in operation. Read What is Mukesh Ambani’s 1-1-1 target for Green Hydrogen

US-based Ohmium International has commissioned India’s first green-hydrogen factory in Karnataka. Tata Power has hydrogen plans too.  

According to this Business Today report, “Adani Green has 3,023 MW solar units in operation and 8,150 MW under construction.” Besides this Adani’s have coal fired power plants, coal mines in Australia and ports where imported coal is unloaded.

Greenko group is a leading energy solution service provider with 7.5GW installed capacity. It recently won a tender for a green H2 by an oil refinery for setting up a plant with a capacity of 300 kg per hour, the green power for which will be purchased from Assam’s distribution companies.

“ReNew Power, India’s leading renewable energy company, along with Indian Oil Corporation and Larsen & Toubro have announced signing of a binding term sheet for the formation of a Joint Venture (JV) company to develop the nascent green hydrogen sector in India.”

Devangshu Datta wrote in Business Standard (28/1/) that about half the proceeds of the Adani Enterprises FPO will be directed towards its green hydro projects. With the FPO plans being dropped it could affect the AG’s green hydrogen plans.

Tata sponsored building at Harvard University. Has the AG given grants to U.S. universities? 

Is the Hindenburg report an attack on India?

India is a lot bigger than the AG. Those countries which might be adversely affected by India’s GH program might make every effort to stop India from reducing fossil-fuel imports. We should be prepared for such a fall-out, have faced bigger crisis and overcome.

Note that Adani Ports business is integrated into its logistics business. See company site. It has former foreign secretary Nirupama Rao as one of its Independent Directors. Also see this Think School video on Adani Ports strategy

Should the Supreme Court get involved in the Adani Matter?

Only if there is a breach of law and the regulator fails to do its duty. Are Judges trained in finance, stock markets and nation building strategy? Let the government do its job. 

Lakhs of crores of market capitalization have vanished cannot be a reason for SC intervention. An Investor Protection Fund is avoidable. No one is forcing you to trade in stocks.

Like many times before, when markets go up investors get greedy and wish to make easy money by buying shares that are rising rapidly. Visit any stock market site and you will get prices trends for the last five years. Investors are expected to use their intellect before investing.

D Basu of Moneylife wrote in Business Standard on 13/2/, “Total Gas was trading around Rs 100 in mid-2020. By May 2021, the stock was pushing Rs 1,400/. The stock rose by 62 per cent in one month, August 2021 and peaked at just under Rs 4,000/ in December 2022.” 

Price of 10/2/23 is Rs 1255/. Remember what goes up fast comes down equally fast.  

Surely, gas companies have benefitted from the Russia-Ukraine war that started in February 2022 but was such an increase in share price warranted?

Also read Short sellers and market erosion: What regulators can and cannot do

The problem is that the AG wants to achieve in less than one generation what Dhirubhai and Mukesh Ambani have collectively achieved so far.

Laws cannot reduce Greed and Ambition.

How have the AG shares moved since the controversy broke out?

At the outset must disclose that as on 13/2/23 I hold 90 shares of Adani Power, 225 shares of Adani Ports and 65 shares of Adani Wilmar. Further, I have no interest or association with the AG and the Green Hydrogen sector.

Share price of Adani Group Companies as on Feb 10, 23 in Rs                                                   

Source-HDFC Securities. Table excludes Ambuja Cements, ACC and Ndtv since they were acquired in 2022.   

The above shows that share price of Ports, Power and Wilmar on 10/2/23 are above their 52 week lows and their IPO price of Rs 440, Rs, 100 and Rs 230 respectively. In fact, a couple of years ago Adani Ports did a buy back @ Rs 500/. 

The 52 week high and current prices of Transmision, Total Gas, Green Energy and AE indicate how high prices had gone. Prices have corrected. Seasoned observers of the market might agree that when share prices go up unreasonably, prices have a way of correcting themselves. 

Some suggestions for the Adani Group

1. Overcome present problems.

2. Consolidate existing businesses.

3. Slow down pace of expansion.

4. Reduce debt, increase equity.

5. Show there is more to the Group than Gautam Adani.

6. No grandstanding with big announcements. Execute quietly like done so in the Ports business.   

People of India must learn to take an integrated view of situations as India seeks to make this critical transition. Importantly, it is for the government and media to share an integrated view. If Courts had all the solutions India would be a developed country today.

If India succeeds in its Green Hydrogen Plans it might lead to economic prosperity and significantly contribute to its global status.

Best Wishes Bharat (Hindi name for India).

Author is a senior Chartered Accountant. Errors, if any are unintended. Do mail with sources, and if found admissible, shall gladly correct the errors.

References and Also read

1. Scientific American Why climate change will fail without India

2. An Open letter to Arnab Goswami     

3. Why India defended Coal at the COP

4. The AMUL way or the MSP way

5. How the BJP can affect change

6. Ideas how India can realize potential

7. Adani Group bets big on Hydrogen power

8. Niti Aayog Paper – Harnessing Green Hydrogen