Reliance Industries has spent over $1.5 billion over the last three years in acquiring global technology innovation companies that will be strategic contributors to its new energy business, in which it is pouring billions of dollars.

It has also applied for and won incentives worth around $750 million under the Production Linked Incentive scheme for all its new energy verticals.

Last week while announcing its third-quarter results, the company said it would commission the New Energy Giga Complex in Jamnagar in the second half of 2024. Being built on 5,000 acres, with five giga factories for photovoltaic cells, fuel cell systems, green hydrogen, energy storage and power electronics, the complex will link the entire value chain.

It has already received approval for nearly 75,000 hectares in the Kutch region of Gujarat, where it is setting up a 50GW renewable energy and green hydrogen complex.

Acquisitions

The nine acquisitions made by RIL, consisting of entire or partial stakes, for the new energy business have been strategic and all of them are specialists in their niche areas. A good part of the acquisitions are in the solar cell, panel and solar technologies space and EPC contractors.

The biggest acquisition is Norway’s REC Solar Holdings AS that it acquired for $771 million in 2021 with the intention of expanding its operations in the US, Europe, Australia, and other countries in Asia.

The REC group is a solar panel maker and has manufactured over 46 million panels globally

The other major acquisition was in 2022 in India, when it acquired a significant stake in Sterling and Wilson Renewable Energy for $285 million from the Shapoorji Pallonji group. It is a solar EPC contractor and will soon be executing projects for RIL as well.

There are other acquisitions such as the UK-based Faradion, which is a leader in sodium ion cell technology and US-based Ambri Inc that specialises in liquid metal battery storage technology. It has also partnered with Denmark’s Stiesdal to make hydrogen electrolysers.

More acquisitions are on the anvil as the company speeds up its plans in this segment. It is investing over $10 billion in setting up a comprehensive ecosystem in this segment.

Valuation

Valuations for the new energy business vary from as low as $8.3 billion to as high as $29 billion, based largely on the expected revenue from its operations in FY25, FY26 and FY27.

Citi, which has valued RIL’s new energy business at $8.3 billion, said investments in the segment over the next few years would be a long-term value driver, “if backed by strong execution and a favourable domestic market, though gains here are likely to be more back-ended.”

Assigning the new energy business a value of $20 billion, Morgan Stanley said the revenue of this segment remains underappreciated in the net asset value of the company.

PLI

The company has won PLIs for both green hydrogen as well as electrolysers, one of only two companies to get both.

It won incentives worth $54 million for electrolysers with a capacity of 300 MW and incentives worth $61 million for green hydrogen with a capacity of 90,000 tonnes. In solar modules, it won incentives worth $635 million in two rounds for 10,000 MW.

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