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14 October 2021

Reliance Industries expands its renewable investment

In June Reliance Industries, one of India’s biggest conglomerates, announced a $10 billion, three-year investment into Indian renewables. At the time it said this would result in a 5,000-acre manufacturing complex in Jamnagar, Gujarat with four gigafactories – one each for solar, energy storage batteries, hydrogen electrolyzers, and fuel cells. Besides manufacturing, the company committed to projects such as 100 GW of solar projects to be developed by 2030.

Now Reliance has lent more detail to the solar part of this ambition, with Reliance New Energy Solar acquiring a 100% stake in Norway-based module manufacturer REC Group, a 40% stake in the Indian EPC provider Sterling & Wilson, and a $29 million purchase of NexWafe shares.

REC Group’s acquisition came with a $771 million price tag: the company, previously owned by China National Bluestar Group, will see its technology used in the Jamnagar gigafactory facility – which now has a name, the Dhirubhai Ambani Green Energy Giga Complex.

Besides modules, REC Group is also one of the remaining non-Chinese polysilicon makers, with production in Norway. With the polysilicon price now reaching five times its levels last year, now looks like a decent enough time to invest – and even if an avalanche of new Chinese factories brings the price back down in 2022, India’s strategy for solar manufacturing encompasses even this furthest upstream raw material. NexWafe for its part has a proprietary technology which should reduce the cost of producing polysilicon.

Reliance Industries began as a textile company in 1957 and has since grown to encompass manufacturing, petrochemicals – including the mammoth Jamnagar refinery – and telecoms. In FY 2021 the company had a net profit of $7.4 billion.

The development of its latest branch, solar manufacturing, is owed to India’s protectionist policies. Right now India has completely cancelled its import duties on solar cells, to succour a solar industry which was suppressed by the lockdowns of 2020. It may even decide it has to extend this duty-free period because of the rise in polysilicon and solar module prices.

But as things stand the country will erect a harsh tariff of 25% on cells and 40% on modules from April 2022, while simultaneously funding the domestic renewables industry with incentives.

Similar policies – a mix of incentives, import tariffs, or outright sanctions on China – will see the new Reliance-backed REC Group also expand into the US and Europe, with 2 GW of production capacity planned for France and 1 GW for the US, while its existing 2 GW facility in Singapore is to be expanded to 5 GW.

As for the 40% stake in Sterling & Wilson, which Reliance was able to buy at a discount because of S&W’s debt problems, this also points towards global ambitions, as the EPC has been involved with 11 GW of renewable power plants across two dozen countries.

Other recent Reliance investments include battery maker Ambri and electrolyzer maker Stiesdal A/S. But Reliance is not the only Indian player making moves – IOC, NTPC, and GAIL, three fossil fuel companies in the subcontinent, have also been investing into hydrogen.