Reliance Industries made two large acquisitions on October 10, just months after unveiling a $10 billion investment plan in the new energy business.
The acquisitions of Norwegian company REC Solar Holdings and India’s Sterling & Wilson Solar, exceeding $1 billion, will bring in-house capabilities for meeting Reliance’s target of 100 GW of solar energy capacity at Jamnagar by 2030.
They also provide new business avenues on capabilities around solar energy worldwide and also help India reach its green goals with self-reliance in critical technology knowhow and equipment for which it is currently dependent on Chinese companies.
“India has one of the world’s most aggressive plans for renewable energy, looking to deploy more renewables-based electricity capacity by 2030 than the entire power system today,” said Arunabha Ghosh, CEO of the Council on Energy, Environment and Water. “RIL’s acquisition of REC, along with deals to invest in energy storage firm Ambri and acquire EPC firm Sterling & Wilson, signal its determination to follow through on its commitments to enable 100 GW of renewables in support of India’s 450 GW target. Moreover, RIL’s plans to invest in green hydrogen is another fillip to next-generation climate technologies and could have a big impact on India’s pathways to industrial decarbonisation.”
The acquisition of REC Holdings for $771 million will bring two manufacturing units in Norway for solar-grade polysilicon and one facility in Singapore for PV cells and modules. REC has 600 utility and design patents, which will come under RIL’s fold.
REC currently has a production capacity of about 1.8 GW and plans to build a 4 GW heterojunction PV module factory in France. It has installed about 10 GW capacity globally.
REC is present in Singapore, North America, Europe, Australia and Asia-Pacific and is expanding in Singapore, France and the US, which Reliance will support.
REC Solar was purchased from China National Bluestar. Chinese companies dominate the global market in solar modules currently.
Sterling & Wilson
Sterling & Wilson Solar, a world-class EPC designer and contractor with a large part of its revenue from Australia and the Middle East, came under investor and the regulator’s radar when cash-strapped SP Group could not meet its debt repayment schedules.
The company was also hit by the slowdown during the pandemic and solar module price increases by Chinese manufacturers, which affected many of its projects.
Under RIL, which is piecing together self-reliance in every aspect of solar capability, experts said Sterling & Wilson Solar will get balance sheet support for third-party guarantees as well as stability in pricing if equipment is at arm’s length pricing under the group umbrella.
Reliance’s investment in Ambri, a US energy storage company developing an alternative to lithium-ion battery solutions, is part of its strategy for renewable energy storage technology, which will be critical to the wider adoption of new energy in place of carbon-emitting conventional power.
Reliance New Energy Solar said in August it would invest $50 million in Ambri, founded in 2010 by Donald Sadoway, a professor at Massachusetts Institute of Technology, and David Bradwell. Reliance New Energy Solar and strategic investors Paulson & Co. and Bill Gates will invest $144 million in Ambri, which will use the funds to commercialise energy storage applications by 2023.
RIL is in talks with Ambri to set up a large-scale battery manufacturing unit in India and this ties in with the conglomerate’s New Energy plan that includes setting up an Advanced Energy Storage Giga Factory.
With three investments since the unveiling of its new energy business at its annual general meeting on June 24, experts expect RIL to be on a hunt to acquire more capabilities in this vertical to make it fully integrated.
India plans to develop 175 GW of renewable energy capacity, including 100 GW of solar power, by 2022.
The solar equipment space is dominated by Chinese manufacturers such as Trina Solar Ltd, Jinko Solar, ET Solar, Chint Solar and GCL-Poly Energy Holdings. India has a manufacturing capacity of only 3 GW for solar cells and 15 GW for solar modules.
Chinese module manufacturers increased prices by more than 20 percent late last year, affecting several green energy projects worldwide.
“As a growth economy, India will have very large and increasing energy requirements for the next two decades at the least. Even with 450 GW installed, renewables will contribute 30-35 percent of overall electricity generation by 2030. So the clean energy market is very large and deals such as the instant ones are entirely timely,” said Anish De, partner and head, energy, natural resources and chemicals, at KPMG in India.
RIL has committed to contribute a large share of India’s solar energy thrust of 450 GW by 2030 and is investing in acquiring technology and global equipment manufacturers, which will be beneficial in safeguarding against the dominance of China.
As India moves towards the path of sustainability with its green goals, ownership of technology and solutions will be critical to meet targets and large business houses can lend their focus and invest towards the country’s self-reliance.
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