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Reliance Industries, the largest publicly traded company in
India by market capitalization, advanced its promised megascale
green investment program by announcing back-to-back acquisitions in
the solar sector.
The Mumbai-listed conglomerate said 10 October that its wholly
owned subsidiary Reliance New Energy Solar (RNES) agreed to buy
Norway-headquartered solar panel maker REC Group from China
National Bluestar for an enterprise value of $771 million.
Separately, the same subsidiary is buying 40% of Sterling and
Wilson Solar, an India-based provider of engineering, procurement,
and construction (EPC) as well as operations and maintenance
services, via a mixture of private issuance, secondary purchases,
and a public offer for as much as Rs 36.3 billion ($481 million) of
stock.
"Reliance is now ready to set up a global scale integrated
photovoltaic (PV) giga-factory and make India a manufacturing hub
for lowest-cost and highest-efficiency solar panels," Reliance
Industries Chairman Mukesh Ambani said in a statement.
The integrated plant in Jamnagar is expected to have an initial
capacity of 4 GW of PV panels per annum before eventually ramping
up to 10 GW.
Ambani, one of the wealthiest people in the world, added: "We
will continue to invest, build, and collaborate with global players
to achieve the highest reliability, efficiency, and economies to
deliver high-quality, reliable power at affordable prices to our
customers both in India and markets worldwide."
Reliance Industries, which owns the world's largest oil-refining
complex in Jamnagar, as well as upstream energy assets, retail, and
textile businesses, aims to become a company with net-zero CO2
emissions by 2035. European energy majors like Shell and BP have
pledged to achieve net zero by 2050.
In June, Ambani announced Reliance Industries
planned to invest Rs 750 billion ($10.1 billion) over the next
three years in clean technologies, including PV cells, batteries,
electrolyzers, fuel cells, and green hydrogen.
Of the pledged investments, Rs 600 billion will be used to build
four so-called giga-factories in Jamnagar to manufacture renewable
energy equipment, and Rs 150 billion in the value chain,
partnerships, and future technologies.
In August, Reliance Industries invested $50 million in Ambri,
which is developing long-duration energy storage systems for
renewable power. Other investors in the Massachusetts-based company
include Paulson & Co. and Bill Gates.
For the long run, Reliance Industries wants to build 100 GW of
solar capacity by 2030.
Solar expansion
REC, which has two manufacturing facilities in Norway for making
solar-grade polysilicon and one in Singapore making PV cells and
modules, has seen multiple changes of ownership in its 25-year
history.
The company was previously acquired by Bluestar, a subsidiary of
Chinese state-owned conglomerate Sinochem Holdings, when publicly
traded on the Oslo Stock Exchange for $640 million and taken
private in 2015.
Reliance Industries said it will support REC's planned
expansions, including the addition of 2-3 GW of annual cell and
module capacity in Singapore, where its current capacity stands at
1.8 GW. Other plans include a new 2 GW cell and module plant in
France and a 1 GW module plant in the US.
"REC's production capacity has limited the company in serving
more customers in more markets which demand its cutting-edge
high-quality products," REC said in a statement. "This new
ownership will allow REC to rapidly boost its scale and better
serve its increasing customer base and end consumers."
The company said it could grow to over 5 GW of capacity within
the next two to three years in Singapore, Europe, and the US with
the added financial heft of its new owner.
Reliance Industries said its planned giga-factory in Jamnagar
will adopt REC technology, and that the acquisition will provide
the Indian conglomerate with a global platform to expand its
renewable energy business.
Value chain enhancement
Separately, the RNES unit is buying a 15.5% stake in Sterling
and Wilson via a preferential allotment and 9.7% from Indian
conglomerate Shapoorji Pallonji and Co., while making a public
offer to acquire another 25.9%.
RNES will acquire 40% of Sterling and Wilson, and Shapoorji
Pallonji and Co. and Khurshed Daruvala—chairman of Sterling and
Wilson—will make up the remaining balance if RNES receives
offers equivalent to less than a 11.1% stake from the public
market.
RNES has priced the shares at Rs 375. Sterling and Wilson's
shares closed at Rs 461.5 on 11 October.
"Sterling and Wilson, with its engineering talent, deep domain
knowledge, global presence, and experience of executing some of the
most complex projects globally, will become an important part of
our solar value chain," Ambani said.
Reliance Industries said it expects the acquisitions will add
engineering capabilities to its renewable manufacturing facilities
in Jamnagar.
Sterling and Wilson has participated in 257 solar power projects
with a total capacity of 11.4 GW via its offices across 24
countries, according to its website.
Daruvala said the partnership provides his company with the
ability to gain more footholds globally as an EPC provider, without
elaborating.
National drive
With the acquisitions, Ambani said he is confident that Reliance
Industries will be the biggest contributor to India's renewable
expansion for the next decade.
India, the world's third-largest GHG emitter, previously
committed to reducing the emissions intensity of its GDP by 33-35%
by 2030 compared with 2005 levels. The country also is aiming for a
40% share of non-fossil fuel sources in its power mix by 2030.
However, the Indian government has not updated the country's
Nationally Determined Contribution since 2015—considered the
gold standard commitment for actual emissions reductions—and is
yet to set reduction targets in absolute terms.
When large hydropower projects were taken into account, official
figures showed India's installed renewable energy capacity reached
141 GW as of 16 June, or 37% of the country's total. Total solar
power amounted to 41.1 GW while wind stood at 39.4 GW as of 31
May.
In the October update of its India Power and Renewables Market
Profile, IHS Markit said the 40% target by 2030 is achievable,
given the trends in renewable capacity addition. Total renewable
installed capacity—excluding large-scale hydro—has grown
from 58 GW at the end of fiscal 2017 to more than 94 GW at the end
the of FY 2021, or 31 March.
"Renewable additions in India are mainly driven by long-term
visibility of targets, demand for competitive tenders, and the
falling cost of wind and solar," the IHS Markit analysts wrote.
The country aims to have an installed renewable generation
capacity of 175 GW by the end of 2022, including 100 GW of solar.
It also set a target for 450 GW of
renewables by 2030, including 280 GW of solar, 110 GW of
onshore wind, 30 GW of offshore wind, and the remainder coming from
biomass and small hydropower projects.
IHS Markit estimates India's solar power could reach 743 GW,
assuming the availability of wasteland and rooftops for
installations. The country's current renewables pipeline of 50 GW
is dominated by solar projects.
With New Delhi willing to provide financial incentives, energy experts said foreign
investors have been pairing up with local independent power
producers to tap the solar market despite issues with timely
payments, land acquisition, and grid access.
But IHS Markit warns that the pace of capacity additions remains
below the government's annual target, citing additional levies on
solar products from China as one of the reasons.
Chinese solar cells and modules had faced a 14.5% safeguard duty
until the end of July. From April 2022, India will impose an import
duty of 40% on Chinese modules and 25% on cells.
"These duties, imposed to support the local manufacturing
industry, have so far remained counter-productive, as the share of
imports continue to constitute the majority of India's solar supply
chain due to their cost competitiveness," the IHS Markit analysts
said.
Posted 12 October 2021 by Max Tingyao Lin, Principal Journalist, Climate and Sustainability
