Solar Gets Its Big Hitter In India As Reliance Announces Rs 75,000 Cr Investment Plan

2021 AGM of RIL, Mukesh Ambani

After hinting at big plans in the renewable energy sector last year, India’s largest private sector enterprise, Reliance Industries limited, has finally announced its plans. The company’s Chairman, Mukesh Ambani, picked the firm’s 44th Annual General Meeting (AGM) for its shareholders, as usual, to make the big announcements.

The key announcements, and their implications for India’s green energy sector, from the Oil to Retail conglomerate matter, because not only does Reliance have the financial muscle ($7.2 billion profits in 2020-21) to take on almost any player worldwide in the clean energy space, the conglomerate has the ability to time its battles right. And right now, it clearly wants to seize the opportunity in clean energy, where almost 25 GW of solar capacity has to be added every year for the decade ending 2030, besides a massive push in green Hydrogen and electric vehicles. Thus the big announcement, that RIL will build a100 GW of solar power generating capacity.

Ambani started off with a reminder of the announcement made at last year’s AGM, when he had announced plans to build a new energy and and new materials business. This was accompanied by an ambitious goal to be net carbon zero by 2035. Today, the Chairman shared the roadmap to achieving that vision.

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“Today, I am happy to present to you an ambitious strategy and roadmap to meet this vision’ he said.

“Our world has only one option, Rapid transition to a new era of clean, green and new energy. While this clean energy transition is a global imperative, it is important for India and other developing nations for another reasons. India is experiencing an explosion of aspirations. GDP per capita is $2000, while the world average is $12000. Power consumption per capita is only one third of global power consumption. This wealth disparity, and energy disparity, is unacceptable”

Ambani stressed on three points. That as one of the biggest energy markets in the world, India will play a leading role in transforming the global energy landscape. Second, as a company always focused on growing businesses of the future, Reliance will provide leadership on the combined strength of its balance sheet, talent, technology and proven project execution capability. Finally scale. Reliance will make, its new energy  business, a truly global business.

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“In 2021, we are launching our new energy business, with the aim of bridging the green energy divide, in India and globally.” He added that the firm would achieve its goals through its  proven guiding principles. Through hyper integration, a robust business model that catches the irreversible upward curve in the demand for green, clean and renewable energy in India and globally, and the downward curve, in the cost of their production. And finally by doing this as scale that delivers the efficiencies needed to make the business deliver returns that meet benchmarks.

“We have started work on developing the Dhirubhai Ambani Green Energy Giga Complex on 5000 acres in Jamnagar . It will be the largest such integrated renewable manufacturing facility in the world. The first part of our plan is to build four giga factories. These will manufacture and fully integrate, all the critical components of the new energy eco system. One for the production of solar energy, where we will build an integrated solar photovoltaic module factory.

Two, for the storage of intermittent energy, Ambani said the company will build an advanced energy storage battery factory.

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Three, he announced an electrolyser factory to produce green hydrogen.

And finally, a fuel cell factory for converting green hydrogen into motive and stationary power.

For its clean energy initiatives, Ambani announced that RIL will invest over Rs 60,000 crore over the next three  years. An additional Rs 15,000 crore in value chain, partnerships and future technologies, including upstream and downstream industries.

“Thus, our overall initial investment from our own internal resources in the New Energy business will be Rs 75,000 (over $10 billion) crore in three years,” said Ambani.

While specific details on the solar voltaic module complex are awaited, it seems safe to assume that Reliance will become the largest manufacturer of at least some of the most vital inputs by backward integration, be it wafers, or even polysilicon. The company has a reputation for backward integration, and more importantly, the ability to pull it off. With execution likely to come up in phases, the Indian market can look forward to seeing an early impact of the Reliance effect from 2022 onwards.

That sets up the market very well for Reliance, as Power and MNRE minister R.K. Singh has reiterated that the plan to impose customs duty on imports will not change, which means a buffer of 40 percent duty on modules, and 25 percent on cells. and With Reliance possibly going for scale at 10 GW level and above, the impact on the market here will be massive.

Industry observers wouldn’t have missed the reference to his telecom arm, Jio, that Ambani made, in the context of speed, market share gains, and leadership in 21 out of 22 telecom circles in the country. What he omitted, and observers will know only too well, is that before Jio entered the market, there were almost 20 telecom firms fighting in the market.  Jio’s entry virtually decimated most of those, leaving the market as virtually a three horse race, with the remaining competition still smarting from the losses they suffered from Jio’s price onslaught.

Finally, India finally has the  Ambani’s enter a business where the other big leader to emerge in the past decade, Gautam Adani’s Adani group has held centre stage. Adani’s Adani Green Energy has laid claim to be the world’s largest green energy firm by the size of its project pipeline. With interests in manufacturing as well, we finally have an Adani versus Ambani battle. It should be a fascinating period of moves and counter moves from here on.