New Delhi: India’s aggressive push towards renewable energy – aiming for 450 GW of installed capacity by 2030 – has led to government policies that appear to favour large corporations like the Adani Group over consumers.
Critics argue that the government’s emphasis on large, centralised solar power plants, supported by substantial subsidies from the Ministry of New and Renewable Energy and the Solar Energy Corporation of India (SECI), has marginalised decentralised solar solutions that could directly benefit consumers.
First, decentralised systems empower consumers by giving them control over their energy generation, shifting the power dynamic away from large corporations.
Second, consumers can generate surplus energy and sell it back to the grid, creating a potential revenue stream.
Third, by producing their own power, consumers can reduce their reliance on the grid and potentially lower their energy bills.
E.A.S. Sarma, a former principal adviser (energy) in the national Planning Commission, criticised the government’s emphasis on centralised solar power plants. In a conversation with The Wire, he said this approach is “misguided and ultimately detrimental to consumers”.
“Centralised projects suffer from multiple inefficiencies – they operate at low capacity utilisation rates, demand huge investments in transmission infrastructure and lose substantial energy during transmission,” Sarma said. “These issues make them more costly for consumers and vulnerable to political manipulation. Ultimately, consumers bear the financial burden of all these inefficiencies.”
To make these centralised solar plants viable and profitable, the government has provided substantial subsidies to corporations.
“The Ministry of New and Renewable Energy and [SECI] initiated these subsidies, which come directly from taxpayer money – meaning that citizens themselves are funding the profitability of these corporate-led projects,” Sarma said.
For instance, under the Production-Linked Incentive (PLI) scheme, Adani Infrastructure and Azure Power India received subsidies of Rs 663 crore and Rs 186.4 crore respectively. Notably, Azure Power India’s power purchase agreement was later cancelled and transferred (see para 72, page 73) to Adani Renewable Energy Holding Four Ltd.
“The need for such substantial subsidies demonstrates the inherently uneconomical nature of these centralised solar plants,” Sarma argued. “These projects are fundamentally inefficient and could not sustain themselves without taxpayer-funded support. This is a clear example of the government prioritising corporate interests over the welfare of its citizens.”
Also read: SECI’s Silence Conspicuous Amid Din of Adani Bribery Allegations
Despite the support, these projects remained economically unsustainable. The high cost of production per energy unit resulted in high selling prices, leading to low market demand.
SECI attempted to address this by allowing companies to voluntarily reduce prices when there were no buyers, hoping that state electricity distribution companies (DISCOMs) would purchase the energy. Over the past two years, 19 or 20 projects with a combined capacity of 9,046 MW have failed to secure customers at their bid tariffs.
“This is where the Ministry of Power stepped in and fostered an environment conducive to corporate manipulation,” Sarma said.
“The ministry has deliberately created scope for corruption in the solar sector by issuing directives under Section 11 of the Electricity Act of 2003. These directives compelled state power utilities to absorb a minimum of 10% of their power requirement from centralised solar power plants set up by corporations like the Adani Group and the foreign-based Azure, irrespective of cost.”
These directives ignored cost considerations and the potential of decentralised solar solutions like rooftop panels, effectively handing over control of the solar sector to corporations. This allowed them to secure lucrative contracts while burdening consumers with higher energy costs, he said.
Sarma extended his criticism beyond the solar sector. He alleged that the Ministry of Power, working with the coal and railways ministries, deliberately created an artificial coal crisis to benefit corporations that owned overseas coal mines. According to him, they engineered supply bottlenecks and transportation constraints, compelling states to purchase expensive imported coal – primarily from companies like Adani.
This manipulation of the coal market drove up energy prices for consumers while significantly increasing corporate profits.
This artificial coal crisis, along with renewable energy obligations, created a captive market for expensive solar energy, ensuring profitability regardless of cost-effectiveness, Sarma said. SECI, a public sector undertaking, played a crucial role by acting as a broker between big corporations like Adani and state DISCOMs. This intermediary position facilitated the sale of expensive solar power while shielding companies from direct consumer resistance to high prices.
“SECI, pressured by the government, compelled states to sign 25-year power purchase agreements,” Sarma said. “These long-term contracts locked states and consumers into buying solar power at fixed prices, even if future technological advances made other energy sources more efficient and cost-effective.”
Also read: Loss of Reputation Is the Real Damage, for Adani and for India
Questions have arisen regarding SECI’s inaction in light of a recent US indictment alleging that the Adani Group used bribery to influence SECI’s decision-making process and secure favourable contract terms. The Adani Group has said that the charges are baseless and has denied them. There are instances where companies other than Adani faced consequences for similar violations.
For example, SECI took action against RPower for submitting fake bank guarantees, resulting in a five-year debarment from bidding on future contracts.
However, the Delhi high court stayed the order because SECI’s grievances were against RPower’s subsidiary, not the parent company itself.
Despite the subsidiary providing a genuine bank guarantee from IDBI Bank, SECI rejected it without explanation. This situation raises concerns about SECI’s potential bias and inconsistent application of rules.
In other instances, Indian authorities have taken action against companies based on findings from foreign regulators. Following a US Department of Justice indictment for violations of the Foreign Corrupt Practices Act, the Indian Railways Board banned Wabtec from participating in future tenders in 2008.
Similarly, a Wall Street Journal article reported a Department of Justice investigation into allegations of corruption related to Walmart’s operations in Mexico, which uncovered evidence of bribery in India. The Central Vigilance Commission launched an enquiry based on this report, although the Delhi high court later set aside the enquiry due to a lack of specific details.
Additionally, the Department of Justice found that CDM Smith employees paid bribes to officials in India between 2011 and 2015. Based on these findings, the National Highways & Infrastructure Development Corporation Limited debarred CDM Smith from future projects.
However, the Delhi high court set aside the debarment because a show-cause notice was not issued to the company.
Moreover, SECI contracts incorporate the Code of Integrity outlined in Rule 175(1) of the General Financial Rules 2017, which prohibits bribery and corrupt practices in government procurement. The US grand jury indictment against Adani, alleging bribery of government officials to secure energy contracts, suggests a violation of this code.
Rule 151 of the General Financial Rules provides grounds for debarring companies from participating in government tenders if they are convicted of offences under the Prevention of Corruption Act of 1988 or if a procuring entity determines they have breached the Code of Integrity. The indictment against Adani could be considered sufficient grounds for SECI to initiate debarment proceedings.
These cases highlight that Indian authorities have, in the past, taken action against companies based on findings from foreign regulators, particularly when those findings relate to corruption and bribery. The severity of consequences has varied, ranging from debarment from future contracts to criminal prosecution.
Furthermore, SECI made repeated amendments to clauses and extended deadlines during the tender process, which appeared to benefit Adani. For instance, SECI allowed extended commissioning timelines of 48 to 60 months for the manufacturing-linked component and introduced lenient definitions of “domestic manufacturing” that enabled companies to import semi-processed components while claiming they were ‘Made in India’.
This suggests a potential double standard that favours the Adani Group.
The emphasis on centralised solar plants, the alleged manipulation of the coal market and the pressure exerted on states to sign unfavourable power purchase agreements all point to a systemic issue where corporate lobbying and influence seemingly trump the interests of consumers and the principles of fair market practices.
Should SECI not act against Adani with the same urgency it has shown in other cases? SECI officials are now under scrutiny in the alleged bribery case, and the organisation faces criticism for potential bias and favouring vested interests.
