Under Section 31(1) of the Competition Act, 2002, the Competition Commission of India (CCI) has authorized Adani Green Energy's acquisition of SB Energy Holding. The proposed combination envisions Adani Green Energy acquiring the complete (i.e., 100 percent) shares in SB Energy Holding from its current shareholders. Adani Green Energy is in the business of generating electricity from renewable sources. The company is a subsidiary of the Adani Group, a large Indian conglomerate with six publicly traded enterprises.

Adani Green Energy and its subsidiaries operate in India, generating electricity primarily by:

1. solar energy,
2. wind energy, and
3. hybrid energy

SB Energy Holding is the ultimate holding company which is involved in the generation, supply, and sale of electricity and renewable energy through special purpose vehicles (SPVs) founded in India to develop renewable energy projects.

Adani Green Energy has purchased the entire stake in SB Energy.
Adani Green announced in May of this year that it had signed share purchase agreements with SoftBank Group and Bharti Group for the purchase of a 100% stake in SB Energy India for $3.5 billion. This deal was hailed as the country's largest acquisition in the renewable energy sector. SB Energy India is a joint venture between Japan's SoftBank Group Corp.

(SBG) (80%) and India's Bharti Group (20%) that has 4,954 MW of renewable energy assets. Large-scale utility assets with 84 percent solar capacity (4,180 MW), 9 percent wind-solar hybrid capacity (450 MW), and 7 percent wind capacity (324 MW) make up the goal portfolio. A total of 1,400 MW of solar generating capacity is operational, with a further 3,554 MW under construction.

All projects have 25-year PPAs with sovereign-rated counterparties such as Solar Energy Corporation of India Ltd. (SECI), NTPC Limited, and NHPC Limited. The portfolio's operating assets are predominantly solar park-based projects that have been created using best-in-class governance, project development, construction, and operations and maintenance procedures, resulting in one of the country's highest-quality renewable portfolios.

Four years ahead of schedule, the Adani Group has completed its goal of constructing 25 GW of renewable energy capacity in India. The goal was met in May of 2021. The company plans to increase its solar cell and module manufacturing capacity to four gigawatts (GW).

The Group is also building a new wind turbine manufacturing cluster in Mundra, Gujarat, as part of its domestic manufacturing ecosystem for renewables. The Group's operations are in line with not only India's climate change ambitions but also the global push for net-zero emissions. Its ports have pledged to become carbon neutral by 2025, with zero trash to landfill, the replacement of single-use plastic, and afforestation of more than 5,000 hectares.

Sustainability goals drive every new firm it incubates, whether it's a network of renewable-energy data centers, green hydrogen exploration with partners like Snam and Tecnimont, or green hydrogen projects. The Adani Group plans to keep investing in such technology and take initiatives to achieve its environmental, social, and governance (ESG) objectives. The portfolio's operating assets are predominantly solar park-based projects that have been created using best-in-class governance, project development, construction, and operations and maintenance procedures, resulting in one of the country's highest-quality renewable portfolios.

"The economic appeal of solar PV, combined with fierce private-sector rivalry, has resulted in record-low tariff bids." At the last climate meeting sponsored by the United States, India also pledged to build 450 GW of renewable energy power capacity by 2030. This will likely raise renewable energy's proportion of overall power generation installed capacity to 54 percent, compared to a 36 percent share of overall gross generation."

According to Raju N, Care Ratings' group head of infrastructure and project finance, the sector will see a lot of consolidation, and the Adani transaction bodes well for the competition. Between April 2000 and December 2020, India received $9.83 billion in foreign direct investment in renewable energy. Total investment in the sector, including domestic spending, has totaled $42 billion since 2014. Companies and private equity firms, such as the Tata Group and Brookfield, have shown increased interest in the sector in recent years.

The major independent power producers, ReNew Power, Greenko, Adani Green, Tata Power, ACME, SB Energy, Azure Power, Sembcorp Green Infra, and Hero Future Energies, are increasingly dominating the Indian renewables sector, according to the report, and each has invested heavily in building capacity in international debt and equity markets. However, companies like Vena Energy/Vector Green, O2 Power, Ayana Renewable Power, and Torrent Power as well as state-owned fossil fuel companies like NTPC and NLC that are looking to decarbonize, are posing an increasing threat.

"Over the past two years, India's renewable infrastructure industry has seen major mergers and acquisitions activity, a growing list of green bond issuances, and spinning off of operating renewable assets via infrastructure investment trusts," said Saurabh Trivedi, co-author of the research.

"However, to fully realize this potential, India requires more project developers with stronger balance sheets, as well as additional opportunities for pension investors. The local infrastructure investment trust market is increasingly being recognized as a significant facilitator of this domestic-foreign capital interplay, allowing the domestic Indian finance industry to expand and diversify "he stated.

Conclusion
The acquisition of SB Energy by Adani Green Energy is the largest deal in India's renewable energy sector, valued at $26,000 crores ($3.5 billion). According to India's Ministry of Power and Ministry of New and Renewable Energy, the country now has one of the largest renewable energy expansion initiatives, with capacity additions of 175 GW by 2022 and 430 GW by 2030.

Many players joined the country's well-publicized National Solar Mission in 2012, which was followed by a revision of solar energy capacity increase to 100 GW by 2022. These newcomers were eager to ride the wave of decarbonization, sustainability, and government efforts to reduce reliance on fossil fuels for energy generation while emphasizing renewable energy. Aside from the increased competition, the sector experienced other issues such as delays in payments by distribution utilities, regulatory delays in tariff adoption, and reverse auction bidding, which drove bid prices to exceptionally low levels. The COVID-19 pandemic, which began in 2020, exacerbated the financial situation of some renewable energy project companies.

Due to a substantial drop in economic activity and power demand, distribution utilities were either postponing payments or hesitating to sign new power purchase agreements, putting the project developer's financial condition and capacity to complete future projects in jeopardy. As a result, numerous renewable energy developers have sold partial stakes to raise finances, or have completely sold off their renewable energy operational assets to deleverage their balance sheets or abandon the sector entirely (in cases where renewable energy was a non-core business).

Despite the difficulties, investors have continued to be interested in India's green economy. As a result, the sector is consolidating, with the largest firms leveraging their financial clout and available capital to expand inorganically.

The acquisition of SB Energy bodes well for Adani Green's aggressive growth goals, both organic and inorganic. Adani Green aims to become the world's largest solar energy renewable company by 2025, and a global renewable company by 2030, with a renewable energy capacity of 25 GW by that time. Sterling and Wilson (renewable projects built through two separate SPVs in Telangana, in March 2021), Toronto-based SkyPower Global (50 MW assets in Telangana, in March 2021), and Spinel Energy and Infrastructure (20 MW in March 2021) have all recently been acquired by the company to fuel their capacity expansion plans.

The acquisition of SB Energy adds 4.9 GW to Adani Green's portfolio, bringing overall renewable energy capacity to 24.3 GW, four years ahead of schedule and close to the anticipated 25 GW capacity. Adani Green Energy's ambition to be a global leader in renewable energy is demonstrated by this acquisition, which makes it one of the world's largest renewable energy platforms.

Written By: Shashwata Sahu, Advocate, LLM, KIIT School of Law