Why did Investors in the US Believe an Educated Non-Scientist Could Build a Hydrogen Plant in India?

The question stems from the remarkable success of Gautam Adani in the commodities trading industry, yet his push into the Hydrogen plant sector in India puzzles many due to his lack of traditional scientific education. Why would capable investors in the United States trust an entrepreneur with no formal scientific background, who likely knows nothing about the atomic number of Hydrogen, to build such a complex infrastructure?

Understanding Investor Confidence

Investors in the United States often look at a company's business model, market potential, and management team more than the personal educational background of the CEO. Adani has built a business empire that is diverse and far-reaching. His companies venture into everything from retail to cement, aviation, ports, and renewable energy. This versatility speaks to his strategic acumen and ability to recognize and invest in potential growth areas.

Moreover, the decision to build a Hydrogen plant in India aligns with a broader strategic vision. Hydrogen is increasingly recognized as a key component in the energy transition, offering a clean alternative to fossil fuels with applications in transportation and power generation. Adani has been proactive in exploring opportunities in this sector, aiming to capitalize on India's growing energy demands and its commitment to reducing carbon emissions.

Indicating Market Potential and Economic Disparity

India has managed to build nuclear plants more cost-effectively than Western nations, a testament to its unique approach to infrastructure development. However, even with these advancements, nuclear power remains significantly more expensive than wind and solar. In the U.S., no nuclear power plants have been proposed since 1998 due to the economic disasters resulting from previous investments. This stark contrast highlights market potential where traditional nuclear power struggles in terms of cost-effectiveness and public acceptance.

In India, the government and private investors have recognized the renewable energy sector's lower costs and higher potential. This shift is evident in the proliferation of wind and solar power plants, leading to energy costs that are three to five times cheaper than nuclear power. While Adani is venturing into a more expensive technology (Hydrogen), his success in other sectors suggests a willingness to invest in promising technologies.

Lessons from the Great Recession

The Great Recession, in Ohio, and Detroit provide compelling examples of the folly of relying on expensive and risky energy solutions. Nuclear power plants contributed to creating a double recession scenario, driving up energy costs and exacerbating home foreclosures. In Ohio, two nuclear plants led to local communities paying almost double the national average for electricity, causing economic hardship before the Great Recession hit. This illustrates the unintended consequences of building expensive infrastructure without thorough planning and public scrutiny.

There is an argument that Adani might face similar challenges. His ventures often involve significant investment and the potential for high returns. However, the due diligence of such projects is often ignored by utility funds, leading to disastrous outcomes. The interconnected nature of global economies means that any financial missteps can have far-reaching consequences.

Conclusion: A Cautionary Tale

While Adani's business achievements are significant, the venture into Hydrogen plant construction in India is risky and controversial. Investors and policymakers must carefully consider the economic and societal impact of such projects. Alternative renewable energies such as wind and solar might offer a more reliable and cost-effective future. As the world moves towards sustainability, it is crucial to learn from past mistakes and make informed decisions that benefit the public and the environment.