Mukesh Ambani preps up for a multi-billion dollar play in renewables

Mukesh Ambani is prepping up for a multi-billion dollar play in the renewable energy space encompassing hydrogen, wind, solar, fuel cells and battery as he looks to transform the energy business of Reliance Industries Ltd into one of the world’s top new energy companies by 2035.

Reliance is expected to unveil the broad contours of the renewable energy strategy including investments in October when it reports the second quarter financial results, a company official said.

The foray into the renewable energy segment could be driven by both organic and inorganic opportunities.

In July, Chairman Mukesh Ambani gave a peek into Reliance's long-term vision of steering the company “beyond oil to chemicals” and how he is “re-imagining” the entire energy platform.

“The catastrophic impact of climate change calls for the legacy energy industry to reinvent itself on a war footing. Furthermore, the world needs access to clean and affordable energy and this must be met, as it is a pre-requisite to ensuring quality of life for all people. To meet these twin challenges, the energy industry must understand that fossil fuels and renewables are not mutually exclusive or contradictory,” he told shareholders at the annual general meeting on July 15.

Fuel mix

India’s fuel mix is dominated by thermal power (64 per cent), followed by renewable energy sources (22 per cent), hydro (13 per cent) and nuclear (1 per cent ).

The government’s policy managers reckon that the future energy mix should be designed keeping in view India’s Nationally Determined Contributions or NDC under the United Nations Framework Convention on Climate Change (UNFCCC) obligations, referred to as the Paris Agreement. NDCs are greenhouse gas emission reduction targets.

India has pledged to reduce the emissions intensity of its GDP by 33-35 per cent by 2030 from 2005 levels. It has also pledged to increase the share of non-fossil fuel-based electricity to 40 per cent.

India’s renewable energy capacity was 86 GW in December 2019, against a target of 175 GW installed capacity by December 2022 and 450 GW by 2030.

The government is looking to raise the share of renewable energy in consumption to 20 per cent by 2025 from 10 per cent by increasing its share in the fuel mix to 39 per cent from 22 per cent.

Building 178 GW of solar and wind power by 2025 will require an investment of over Rs891,300 crore, according to the government.

Reliance, Ambani said, will build an optimal mix of reliable, clean and affordable energy with hydrogen, wind, solar, fuel cells and battery. It will combine the strengths in digital, power electronics, advanced materials and electrochemistry to develop full stack electrolyser and fuel cell solutions.

“Transforming our energy business to tackle one of the biggest challenges before India and the world is our new growth opportunity. On successful implementation of this strategy, we target to become net carbon-zero by 2035,” he said on July 15.

15-year vision

The 15-year vision of building Reliance as a new energy company will be implemented through a platform company “in a worldwide collaborative model”, Ambani stated.

“This model envisages a large coalition of global financial investors, reputed technology partners and start-ups working on futuristic solutions,” he said.

The new energy business based on the principle of carbon recycle and circular economy is a multi-trillion opportunity for India and the world. It is also an opportunity to make clean and green energy abundantly available at an affordable price to every Indian, every Indian enterprise and every Indian utility,” he added.