Reliance’s New Renewable Energy Business: Most of the industry experts believe that Mukesh Ambani’s announcement has strongly pushed the renewable energy sector into the spotlight.
India’s Renewable Energy Sector
India’s embryonic renewable energy sector is brimming with possibilities and is rapidly expanding. According to the Indian Brand Equity Foundation, a state-owned export promotion body, it has attracted investment worth $42 billion since 2014, with an installed renewable energy capacity of 94.43 GW (as of February).
According to the Indian Brand Equity Foundation, India’s new energy industry might attract $500 billion in investments by 2028. According to the Indian Brand Equity Foundation, renewable energy will generate roughly 49 percent of total electricity in India by 2040, with more efficient batteries being used to store power, lowering solar energy costs by 66 percent.
Reliance’s New Renewable Energy Business
Reliance Industries, a fossil fuel giant, is moving into renewables, with company chairman Mukesh Ambani announcing a Rs 75,000 crore investment plan on June 24. Industry experts in India say Reliance’s statement has firmly thrust the renewable energy sector into the spotlight.
Vibhuti Garg, an energy economist at the Institute for Energy Economics and Financial Analysis in the United States, stated, “It is really encouraging to see how significant firms in India are making pledges and channeling investment into the clean energy field.”
Reliance’s announcement on renewables, like the company’s aggressive entrance into mobile internet with its Jio platform and gadgets in 2016, sent shockwaves across the energy market. Jio already dominates the market and has big aspirations for 5G.
Strategy for its New Renewable Energy Business
Here is Ambani’s 3 step plan to replicate Jio’s success with renewables:
Hyper-Integration: Creating and operating integrated systems by combining scientific understanding with technical innovation.
Robust business model: By developing a model that captures the irreversible increasing trajectory in green energy demand in India and around the world, as well as the downward curve in the cost of producing it.
Scaling capacity: By improvising on the performance, efficiency and life-cycle of assets and operations.
Investments made by Other Companies
In a country that is still highly reliant on coal, Ambani’s Reliance isn’t the first company in India to change its focus to green and renewable energy. On June 22, NTPC, India’s largest energy company, said that it would increase its renewable energy capacity to 60 GW.
Similarly, in March, Adani Green Energy signed a contract to acquire a 100% stake in SkyPower Global’s 50 MW solar power project in Telangana. With this agreement, the company’s operational renewable capacity will expand to 3,395 MW, and its entire renewable portfolio will increase to 14,865 MW.
India and the US reformed their strategic energy agreement in the same month, focusing on greener energy sectors such as biofuels and hydrogen generation. “Companies that continue to spend large on fossil fuels have seen shareholder value deterioration, and there is rising pressure from the boardroom to invest sustainably,” stated Garg of the Institute for Energy Economics and Financial Analysis.
Can Reliance Industries do even better?
Despite the $10 billion investment, industry analysts say Reliance might do better. The scale of this investment is quite tiny, given RIL’s previous investments in the petrochemicals and telecom sectors, according to Ashish Fernandes, CEO of Climate Risk Horizons, a Bengaluru-based climate research company.
“However, it is a sign that big industry is beginning to realize that the age of fossil fuel power expansion is coming to an end much sooner than anticipated.” Fernandes urged investors in the coal, oil, and gas sectors against any new fossil fuel investments, emphasizing the need to take green energy more seriously.
He went on to say, “These are out-of-date legacy investment plans that need to be re-examined in light of rapid changes in energy economics. He also added that “India will suffer major economic consequences if it continues to promote stranded fossil fuel investments.”
