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Reliance and Adani lead India's clean energy investment rush

Billionaire Ambani dives into new businesses as rival Adani cements green push

Two major conglomerates, Reliance and Adani, will drive investment in renewable energy in India. (Source photos by Reuters, Getty Images and screenshot from Reliance's website)

NEW DELHI -- All eyes have turned to India's renewable energy sector, where billionaire Mukesh Ambani has laid out ambitious multibillion dollar investment plans, at a time when fellow tycoon Gautam Adani is already going strong.

In a mega push into clean energy, Ambani's Reliance Industries, an oil-to-telecom conglomerate, recently announced plans to invest 750 billion rupees ($10.1 billion) in the sector in its bid to become net carbon zero by 2035. "The age of fossil fuels, which powered economic growth globally for nearly three centuries, cannot continue much longer," Ambani said, addressing shareholders on June 24.

As part of its foray into green energy, Reliance Industries, a fossil fuel giant which runs the world's biggest refining complex at Jamnagar in western Gujarat state, is looking to build four "giga factories" to manufacture solar modules, advanced energy storage batteries, electrolyzers for producing green hydrogen, and fuel cells.

"Over the next three years we will invest over 600 billion rupees in these initiatives," Ambani, Asia's richest man, said, adding that Reliance will thus create and offer a fully integrated, end-to-end renewables energy ecosystem. "We will invest an additional 150 billion rupees in value chain, partnerships and future technologies, including upstream and downstream industries."

The Mumbai-based conglomerate is aiming to set up at least 100 gigawatts of solar power generation capacity by 2030 and invest in establishing India's first carbon fiber plant for supporting its hydrogen and solar ecosystems. It has already started work in Jamnagar on developing a "green energy giga complex" spanning over 2,000 hectares, which will be one of the largest such integrated renewable energy manufacturing facilities in the world.

Prime Minister Narendra Modi had said in November last year that India's renewable energy capacity was 136 GW, about 36% of the country's total capacity. "There are huge renewable energy deployment plans for the next decade [that] are likely to generate business prospects of the order of around $20 billion per year," he told the 3rd Global Renewable Energy Investment Meeting and Expo. The country is aiming for 450 GW by 2030, focusing on solar, wind and bio energy, as well as storage systems, green hydrogen, and international cooperation through the International Solar Alliance. Ambani's goal of 100 GW would account for over a fifth of India's target by the end of this decade.

Incidentally, Reliance Industries' legacy oil and petrochemicals business is grabbing the spotlight too, as Ambani said he expected the $15 billion deal with Saudi Aramco to be formalized this year in an "expeditious" manner. It was announced in 2019 and called for selling a 20% stake in the Indian conglomerate's oil-to-chemicals business. He also announced that Aramco Chairman Yasir al-Rumayyan will join the Reliance board.

Ambani also spoke about transforming his legacy business into a sustainable, circular and net zero carbon materials business -- "one that will provide growing returns over several decades."

Reliance's plans echo the goals of global energy giants such as Royal Dutch Shell and BP, which also aim to become net zero emissions businesses by 2050, in the face of growing pressure from the investor community and climate activists.

Interestingly, Ambani's ambitious green push comes at a time when Adani, India's No. 2 billionaire, continues to focus on renewable energy. In May, Adani Green Energy signed an agreement for 100% acquisition of SB Energy Holdings -- an 80:20 joint venture between Japan's SoftBank Group and India's Bharti Group -- for an enterprise value of about $3.5 billion. It houses nearly 5 GW of renewable energy assets in the South Asian country. On last Wednesday, Competition Commission of India, the country's fair-trade regulator, said it had approved Adani's acquisition of the entire shareholdings of SB Energy.

Speaking at the India Global Forum on last Wednesday, Adani said the green energy arm of his Ahmedabad-based ports-to-power conglomerate is on track to be the world's largest renewable energy company by 2030. "While we are India's largest integrated energy utility platform, our newer infrastructure builds are focused on renewable energy," he said. "In 2020, we [became] the largest solar producer in the world, a journey we started in 2015, and last month we caught up to our renewables target of 25 GW, a full four years ahead of schedule."

Adani Green Energy signed an agreement for 100% acquisition of SB Energy Holdings -- an joint venture between Japan's SoftBank Group and India's Bharti Group in May. (Photo courtesy of Softbank)

Comparing it to the game of cricket, he said, "Those who see the Adani Group solely as India's largest thermal power producer are watching not the [complete] match but only the opening overs."

Analysts, meanwhile, do not see Reliance Industries' foray into green energy as a threat to the established players. It is more complementary rather than competing at this point, Probal Sen, senior vice president (research) at Centrum Broking, told ET Now business news channel when asked what the Reliance move meant for companies such as Adani Green. "I would not necessarily look at it as a threat," he said, adding that more players create an ecosystem, bringing efficiency for all.

According to the International Energy Agency's India Energy Outlook 2021 report released in February, the South Asian nation will soon become one of the world's largest markets for a slew of clean energy technologies, making it a major target for developers seeking sales growth. In the stated policies scenario, "the Indian markets for solar [photovoltaic] modules, wind turbines, lithium-ion batteries and water electrolyzers together grow to around $40 billion per year by 2040."

Climate sector analysts, meanwhile, feel that big corporations should do more toward going green. The stage has been set for such companies to cut their absolute emissions through clearly stated policies of moving away from fossil fuels, according to Sunil Dahiya, an analyst at the Centre for Research on Energy and Clean Air.

"We haven't seen that happening at the required scale in India till now," he told Nikkei Asia. "We just hope that this situation changes and we see more stronger policies and real action to reduce overall emission load in the near future."

On Reliance Industry's pledge to invest $10 billion in renewable energy, he said the announcement is "definitely a good step ... and will set the ball rolling for many others, but this is not enough, looking at their overall investment profile and particularly looking at the repercussions we are seeing of the damaged environmental quality, [its] health impacts and climate change catastrophes."

It is noteworthy that Reliance raised $44.4 billion during the financial year ended March through stake sales, rights issues and asset monetization -- the most by any company globally in a year, despite the COVID-19 pandemic.

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