RIL to pivot to clean energy with Rs 75,000-crore investment in three years

Mukesh Ambani said the company started work on developing the Dhirubhai Ambani Green Energy Giga Complex on 5,000 acres in Jamnagar.

Reliance Industries chairman Mukesh Ambani announced the conglomerate’s ambitions to recast itself increasingly as a clean energy enterprise, powered by huge investments as it braces for a new future.

“Let me tell you, in all humility, that New Energy is the most exciting, most challenging and most purpose-driven mission I will be pursuing in my life,” Ambani said at the company’s AGM on Thursday.

Ambani revealed the plans lined up to pursue RIL’s clean energy goals, which will entail an investment of Rs 75,000 crore over three years .

The first part of the plan will be to build 4 Giga Factories. These will manufacture and fully integrate all the critical components of the New Energy ecosystem. “One, for the production of solar energy — we will build an integrated solar photovoltaic module factory,” he said.

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

Three, RIL will build an electrolyser factory to produce green hydrogen (hydrogen fuel that is created using renewable energy instead of fossil fuels).

Four, RIL will build a fuel cell factory for converting hydrogen into motive and stationary power.

RIL joins other global energy majors such as BP and Shell that are pouring big money into renewable energy projects. These companies are eager to not only produce clean energy but also make money from supplying it to other businesses and even end users.

For its clean energy initiatives, RIL will invest over Rs 60,000 crore over the next three  years, said Ambani. The company will invest 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.

Big Energy Goes Green

For big energy companies, the renewable energy push poses a twin dilemma. One, a lion’s share of profits from come from fossil fuels, and oil and gas and petrochemical assets are money-spinners because the consumption of petroleum is expected to continue for years despite the increased focus on clean energy.

Two, there is a cloud of doubt over the profit potential of renewable energy assets, especially wind farms.

Yet, no company can ignore a future that that may be slow now but is emerging day by day.

In RIL’s case, the clean energy-related announcements at the 44^th AGM do not come as a surprise. At the recent Qatar Economic Forum, Ambani had made clear his views on the subject.

“We have no option as a society, as a business, but to really adopt a sustainable business model. Sustainability is a prerequisite for every business to survive, and this means transforming businesses and integrating them with the future,” he said.

Clear Goals

Yet, the pivot to a cleaner, greener avatar is bound to be challenging one of India’s most valuable firms as its revenue mix is still skewed heavily towards its hydrocarbon fuelled energy vertical which contributed to nearly 60 per cent of the combined revenues for the year ending March 2021. But the company is well on its way to not only shore up more revenues from the fast growing digital and retail verticals but also transform its energy business.

“We have a 15-year vision to build Reliance as one of the world's leading New Energy and New Materials company,” said Ambani at the 2020 AGM of Reliance.

As part of the roadmap to the 2035 deadline, RIL is looking to morph into a new energy company, with recycling of carbon dioxide and production of clean and affordable energy with hydrogen, wind, solar, fuel cells and battery. The company has begun converting its CO2 emissions at Jamnagar into high-value proteins, nutraceuticals, advanced materials and fuels.

Ambani also said the company started work on developing the Dhirubhai Ambani Green Energy Giga Complex on 5,000 acres in Jamnagar. “Reliance will thus create and offer a fully integrated, end-to-end renewables energy ecosystem.”

This will be amongst the largest such integrated renewable energy manufacturing facilities in the world, according to him. “Jamnagar was the cradle of our old energy business. Jamnagar will also be the cradle of our new energy business.”

The move is in sync with the Modi government’s plans to become one of the largest renewable markets in the world after setting up an ambitious 175GW renewable target by 2022.

Reliance will put Gujarat and India on world solar and hydrogen map, Ambani said at the AGM on Thursday. “All our products will proudly proclaim: Made in India, by India, for India and for the world! This will be Reliance's yet another big contribution to our Prime Minister's clarion call of Atmanirbhar Bharat.”

RILL will also build two additional divisions to strengthen its clean energy ecosystem.

The Renewable Energy Project Management and Construction Division will provide gigawatt scale end-to-end solutions for large renewable plants across the world. It will also enable and partner with thousands of Green MSME Entrepreneurs, who can deploy kilowatt to megawatt scale solutions in agriculture, industry, residences and transportation.

RIL will also create a dedicated Renewable Energy Project Finance Division that will finance the entire ecosystem of small businesses and entrepreneurs who invest alongside the company.

Benefits for O2C business as well

Ambani said the company's green vision has immense benefits for its existing oil to chemicals (O2C) business.

The company will use solar energy on an economically attractive basis to decarbonise its existing O2C business and accelerate our journey to become net carbon zero. RIL will also use Green Hydrogen and CO2 as raw materials to develop a road map for new green chemicals, green fertilisers and e-fuels.

“We will transform our legacy business into sustainable, circular and net zero carbon materials business.”

This twin execution plan of building a New Energy and materials ecosystem and decarbonising and repurposing the existing O2C business is a multi-decade growth path for RIL, said Ambani. “It has the potential to create unprecedented value for India and for Reliance in the coming years.”

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