RIL AGM 2024: Mukesh Ambani predicts new energy earnings to match O2C division in 5-7 years

mukesh ambani

Reliance Industries Ltd Chairman Mukesh Ambani expressed confidence in the company’s new energy sector, predicting that it will soon rival the earnings capacity of its established oil-to-chemicals (O2C) division.

At the company’s 47th annual general meeting, Ambani said that the new energy business is expected to bring in steady and reliable cash flows that will match the earnings of the O2C sector within the next five to seven years.

“We believe that our New Energy business will be truly unique—delivering cash flows that are less cyclical and more predictable. I am, therefore, confident that in the next 5 to 7 years, our New Energy growth engine can aim to deliver an earning capacity, like what our existing O2C business earns and what it has achieved over the last four decades,” Ambani told shareholders at the company’s annual meeting on August 29.

RIL is boosting its investments in new energy, aiming to secure a larger share of the growing market as India pushes towards its goal of achieving 500 GW of renewable energy capacity by 2030.

“In 2023, India generated nearly 1,600 billion units of electricity. To meet India’s growth projections, this number needs to double in the next 10 years. Obviously, Green and Clean energy will need to provide the lion’s share of this growth,” Ambani said.

Since its entry into this field in June 2021 with the establishment of Reliance New Energy (RNEL), RIL has invested $2 billion out of a planned $10 billion for the first three years. Ambani highlighted that the conglomerate’s strong balance sheet, robust annual accruals, and access to highly competitive global institutional capital are key factors supporting its new energy investments.  Brokerage Kotak Securities noted that the pace of investment will rise as “initial learnings are integrated”.

Analysts predict that with much of the 5G-related capex now completed, the company’s focus will shift towards further growth in consumer businesses and the rollout of its new energy ventures, which are expected to drive the next phase of growth.

Reliance is actively involved in several new energy businesses, including solar energy through Reliance New Solar Energy Limited (RNESL), green hydrogen production, and battery energy storage systems. The company is also developing a Renewable Energy Manufacturing Hub in Jamnagar.

“By 2025, Jamnagar will also become the cradle of our New Energy business,” Ambani added.

Giga factories

Ambani said the company would integrate backwards into cell manufacturing and eventually into battery chemicals production over the next few quarters as it readies its Dhirubhai Ambani Green Energy Giga Manufacturing Complex, which is expected to be commissioned in the second half of 2023. The company said it is on track to invest up to Rs 75,000 crore for this hub, which is roughly 3.6 percent of Reliance’s current market cap.

The manufacturing complex, spanning over 5,000 acres in Jamnagar in Gujarat,  comprises five giga factories for photovoltaic panels, fuel cell systems, green hydrogen, energy storage and power electronics.

“We have already begun construction of an integrated advanced chemistry-based battery manufacturing facility with a 30 GWh annual capacity at Jamnagar. Production will commence by the second half of next year,” Ambani said, adding that the company will start by assembling Battery Energy Storage Systems (BESS) for utility-scale applications and pack solutions for residential, commercial, industrial, telecom, and mobility markets.

“These production lines will be future-proof and adaptable to different chemistries and changing cell form factors,” he said. Additionally, the company expects its multi-gigawatt electrolyser factory to be ready by 2026 to cater towards the production of green hydrogen and other green fuels.

Separately,  Reliance has secured access to nearly 2,000 acres of land at Kandla Port for an integrated coastal infrastructure. The set-up will used for the production, storage, evacuation, and shipping of green fuels to various markets in India and across the globe.

“With this robust ecosystem, we will accelerate the development of RE-RTC and green fuels projects in a modular and phased manner,” Ambani said.

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