you are here: HomeNewsOpinion

RIL AGM 2021 | Reliance’s renewable energy foray is a welcome initiative

The government has set ambitious targets in the clean energy arena, but there has been some slowing down of late. Reliance’s entry into this sector should galvanise action 

June 25, 2021 / 12:14 PM IST

While news of the Google-Jio smartphone grabbed the early headlines in reporting on Mukesh Ambani’s speech at the Reliance AGM, this launch could be seen as the latest milestone in the saga of Reliance’s quest to provide affordable communications in line with Dhirubhai’s exhortation to bring down the cost of mobile phone usage on par with that of a postcard.

As a student of technology management and innovation, it was good to hear from Ambani’s speech that Reliance has successfully developed and deployed its own technology platform for its 5G rollout. News reports that arch-rival Airtel has decided to collaborate with TCS to develop its own platform too shows a welcome confidence in developing advanced technologies in India.

And, Reliance’s parallel collaborations with 3 technology giants – Google, Facebook and Microsoft – provide fresh evidence of Reliance’s importance to the plans of the top technology companies.

But, among the announcements made by Ambani yesterday, it is Reliance’s ambitious foray into new and renewable energy systems that is likely to have the greatest long-term impact.

There is little doubt that, both from an energy security point of view and from an environment and sustainability perspective, India needs to accelerate on the clean energy front. The government has set ambitious targets in this arena, but there has been some slowing down of late. Reliance’s entry into this sector should galvanise action.

Close

Drawing attention to the changing geopolitics of the movement of goods, Kumar Mangalam Birla is recently quoted as saying that his investments will be focused on areas that have integrated regional or national supply chains. Reliance’s demonstrated ability to create efficient cost-effective end-to-end chains in the O2C and retail spaces should enable it to do the same in the solar energy and energy storage businesses. From a policy perspective, the proposed Dhirubhai Factory Complex in Jamnagar should give a fillip to the Make in India and Aatmanirbhar Bharat programmes.

Indian business houses have traditionally preferred the licensed technology route and stayed away from businesses where technology is changing rapidly. Reliance’s foray into new technology-based energy businesses will hopefully signify a decisive shift away from this approach.

While India has seen earlier (and unfortunately, largely unsuccessful) efforts to create a significant local presence in new energy technologies – Moser Baer’s initiative comes immediately to mind – Reliance’s deep pockets and legendary execution abilities should make the difference this time.

Yet, there will be significant challenges. Globally, fossil fuel companies have struggled to make the transition to renewables. Advanced storage technologies and fuel cells are areas that are still technologically work in progress. Under Obama, the US government pumped significant resources into the development of new energy technologies but with modest results.

Further, new energy technologies are strongly linked to advances in materials science, and though India has talented and capable material scientists in academia and research institutions, we have been largely unable to scale-up and commercialise new materials technologies. Many of the primary resources required for advanced energy technologies like Lithium, Cobalt and Nickel are not available in commercially-exploitable quantities in India. As a fuel, Hydrogen has significant issues in storage and production.

There are challenges on the domestic policy and regulatory front as well. To lock-in their best customers (large industrial companies), financially-distressed discoms want corporates to sell their low-cost captively generated renewable power to them and buy the power they need for their operations back from the grid at three times the price.

Knowing the thoroughness with which Reliance plans its forays into new domains, it is reasonable to assume that Ambani is aware of these challenges and has a plan to address them. I will be watching this space with great interest.

Disclosure – The writer owns 480 fully paid-up and 32 partly-paid up shares in Reliance Industries Ltd. He does not have any other pecuniary relationship with the company.

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Rishikesha T Krishnan is Director and Professor of Strategy at IIM Bangalore. Views expressed here are personal.

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark