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Explained: Ambani's massive green energy push which could 'outshine' other Reliance segments

Acquiring companies, investing in new tech to play key role in green energy expansion


Over the last few decades, Reliance Industries made its fortunes from oil refining and petrochemicals and these businesses still account for over half of its revenues. Renewable energy will be its new growth engine over the next few decades as the Mukesh Ambani-led conglomerate makes a massive push into areas like solar and green hydrogen to achieve its target of net zero carbon emissions by 2035.

“Over the next 12 months our investments across the green energy value chain will gradually start going live, scaling up over the next couple of years. This new growth engine holds great promise to outshine all our existing growth engines in just 5-7 years,” Ambani said in a letter to shareholders.

Any business that Reliance enters, it always looks for scale, as has been seen in oil refining, petrochemicals or retail, and in recent years its telecom vertical Jio. RIL will aim for a similar scale to make clean and abundant energy available at affordable cost. “Just as India has the world’s most affordable wireless broadband today, we will have the world’s most affordable green energy within this decade,” said Ambani.

RIL’s green energy ambitions will be achieved by organic as well as inorganic expansion. For instance, at the annual general meeting last year, RIL announced plans to invest Rs 75,000 crore by 2024 in its new energy business. These investments will go towards building four giga factories to build an end-to-end renewable energy solution and enable at least 100 GW of solar energy by 2030.

“We have a 15-year vision to rebuild Reliance as one of the world's leading new energy and new materials company. The roadmap includes creating sustainable energy sources

and materials for India's future needs, building world-scale assets that produce clean fuels and materials of the future and developing next generation carbon capture and storage technologies to convert carbon dioxide into useful products and chemicals,” said RIL.

Some of these projects are already under way. The company is developing the Dhirubhai Ambani Green Energy Giga Complex on 5,000 acres in Jamnagar, where the four giga factories are coming up. The factories include an integrated solar photovoltaic module factory, an advanced energy storage battery factory for intermittent energy, an electrolyser factory for the production of green hydrogen and a fuel cell factory for converting hydrogen into motive and stationary power.

“We are also setting up infrastructure in Jamnagar to manufacture ancillary material and equipment needed to support the giga factories and enabling independent manufacturers to join and grow as part of this ecosystem,” the company said.

RIL is establishing targets for periodic reduction in emissions, which will be monitored regularly through governance mechanisms overseeing RIL’s progress towards being net zero.

Acquiring companies and investing in new tech will also play a key role in RIL’s green energy expansion. It has already completed acquisitions and investments of over Rs 5,500 crore to build new energy capabilities. Some of these include acquisition of REC Solar Holdings, 40 per cent stake in Sterling & Wilson Renewable Energy, a $50 million investment in clean energy battery maker Ambri, $61 million investment to acquire assets of Lithium Werks and $29 million investment in Germany’s NexWafe.

The company has also set up a new energy council, which will be chaired by Raghunath Mashelkar (RIL board member and former DG, CSIR) and includes eminent personalities like Alan Finkel (former chief scientist of Australia), Geoffrey Maitland (professor of energy engineering at London’s Imperial College), Robert Armstrong (director of MIT’s Energy Initiative) and Henrik Stiesdal (wind energy pioneer) among others.

“India is set to become one of the world’s top three economies in the next couple of decades, and all of Reliance’s business verticals will play a leading role in achieving that. India and Reliance will aim to play a leading role in the world’s transition to clean energy,” said Ambani.

The 45th annual general meeting of RIL will be held on August 29. The company could spell out future plans and additional investments in the new energy business, apart from a focus on other areas like telecom, 5G and retail.

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