Reliance is going green with its solar move. What you need to know
Reliance seems to be directing its energy towards a new industry that has recently caught its fancy! Yes, it is going the green energy way and is giving this energy movement a big push with its plans to create new industries, produce equipments that support green energy and create green energy itself.
Reliance has also been getting together with many international companies who are into the green energy segment, to bring the technology to India. With fuel prices going through the roof and countries seeing drastic climate change, the company looks to be setting a trend by moving to green energy at a time when it is needed more than ever.
RELIANCE'S BIG GREEN MOVES IN 2021
In June 2021, Reliance announced a Rs 75,000 crore investment in green energy, which it split into two parts.
- The first part, Rs 60,000 crore would be invested in creating 4 giga factories to create Solar PV models, fuel cells, electrolytes and batteries.
- The balance Rs 15,000 crore would be invested to create infrastructure and add to the value chain and technology to support the green energy.
But first, what are fuel cells? Watch this:
Reliance has thrown a big stone into the pond by deciding to invest not only in solar energy itself, but also by investing in creating the equipment for solar energy. Its big targets for 2030 include:
- To create 100 gigaWatt solar energy by 2030
To create large-scale grid batteries to store power
To use fuel giga factories to convert hydrogen into stationary power
To use electrolyser factories to produce green hydrogen
Its big targets are set to create ripple effects in the solar industry as manufacturing solar PV panels and storage production units will help them create and store the solar energy by themselves, and manage the supply chain well. Producing fuel cells that help in creating hydrogen, instead of outsourcing it to another entity, will also be beneficial for Reliance.
RECENT ACQUISITIONS AND INVESTMENTS
Reliance New Energy Solar, Reliance's solar business company, has made big moves in 2021 in line with Reliance's vision of going green. Each deal has given Reliance a strategic foothold in the renewable energy manufacturing story.
1. Reliance invested $50 million in Ambri Inc, a battery development company to explore alternatives to lithium ion. It plans to produce these batteries in India
2. It acquired REC Solar for $771 million from China National Bluestar in October 2021. Solar REC manufactures polysilicon PV cells and solar modules. This is what it looks like:
3. Reliance went on to acquire a 40% stake in Sterling and Wilson Solar, a company into operations and solar maintenance.
4. It then invested 25 million Euros in Germany-based NexWafe, which produces low-cost solar wafers, and is into product and tech development.
5. Reliance then entered into an MOU with Denmark-based Stiesdal to develop and manufacture hydrogen electrolysers.
6. Last but not the least, it acquired 100% stake in Faradion, a sodium ion battery producing company. Reliance will use this technology in their giga factories.
As solar manufacturing production and distribution in the Indian industry is highly fragmented, Reliance's moves are making a big disruption.
WHY FARADION?
Faradion uses sodium, which is abundantly present in Earth's crust than lithium ions, to produce sodium ion batteries.
Also, as demand for electric vehicles and their components is huge right now with consumers and manufacturers, the raw materials are bound to get scarce with an increase in cost. As companies are currently using lithium ion cells, the price for it is expected to rise by 5 times. In comparison, investing in sodium-ion batteries makes more sense in the long term perspective for Reliance given its abundant supply.
Internationally, China is the largest producer of all solar panel items and Reliance's move will help it compete with China's manufacturers later on.
Sodium-ion batteries are an attractive alternative to lithium-ion batteries because they are safer and about 30% cheaper. Their major disadvantage is that their energy density is substantially lower than that of the latest lithium-ion batteries. Irrespective of this fact, Reliance sees potential in renewable power storage as well as vehicles.
PM Narendra Modi has vowed to meet 50% of the country’s energy needs from non-fossil-fuel sources by 2030. For this, the government has to arrange the production, storage and transportation of this energy.
Lithium-ion batteries can cause fire hazards, whereas sodium-ion cells are less likely to explode in transit. As Reliance usually takes advantage of government policies and leads the way through change in Indian economy, Reliance can benefit tremendously with this move. Acquisition of Ambri and Faradion’s patent also gives Reliance an advantage as Ambri has a similar aim of developing expertise for safe, economical storage of large-scale renewable power.
THE BUSINESS ENVIRONMENT
Tesla has been wanting to invest in India but has been held back because of government regulations. The Telangana state government is already extending support to invite Tesla into the country. So, it is important for Reliance to make this move before India sees external competitors making a foothold in the solar industry business.
This gives Reliance time and space to make the first move. Also given that the demand will be quick to rise, it is essential to have supply in place so that India does not end up spending foreign currency to import essential renewable energy resources.
The Ministry of New and Renewable Energy has imposed basic customs duty of 25% on import of solar PV cells and 40% on modules from April 2022. There is also a production-linked incentive scheme to the extent of Rs 4,500 crore for domestic and global players to produce high efficiency solar modules and build large scale PV capacities here.
What do you think of Reliance's big move?