Following up on its mega announcement in June, Reliance Industries (Reliance) has completed a series of acquisitions and investments heralding its entry in the clean energy sector. The company has: a) acquired 100% stake in Norway-headquartered solar panel manufacturer REC for an enterprise value of INR 58 billion (USD 771 million); b) bought a 40% stake valued at INR 28 billion (USD 372 million) in Sterling & Wilson, one of the world’s largest solar EPC and O&M companies; and c) announced strategic tie-ups with technology companies spanning grid storage, silicon wafer and electrolyser manufacturing.
REC is an integrated polysilicon-module manufacturer with a production capacity of 1.8 GW per annum. The company, one of the first to commercialise PERC and heterojunction technologies (HJT), is regarded as a pioneer in module manufacturing. Inability to compete with Chinese manufacturers on cost – manufacturing operations are split between Norway (polysilicon) and Singapore (cells and modules) – has restrained growth. But with trade protectionism rising and wide-ranging concerns about reliance on Chinese imports, business prospects are looking up. REC is considering plans to set up a 2 GW manufacturing plant in France and a 1 GW plant in the US.
The India-based Sterling & Wilson has expanded aggressively into 24 countries around the world including Middle East, Americas, Europe, SE Asia and Australia. Its business portfolio includes over 11 GW of commissioned and pipeline solar EPC capacity, 8.7 GW of O&M capacity and recent forays in wind-solar hybrid, storage and waste-to-energy sectors.
Other investments/ tie-ups entail relatively young companies with breakthrough technologies under development:
- USD 144 million investment in Ambri, a US-based grid energy storage company working on alternatives to lithium-ion technology with more resilient batteries that can store power for up to 24 hours;
- USD 29 million investment in Germany’s NexWafe, with a proprietary technology to produce ultra-thin low-cost monocrystalline silicon wafers by going directly from gas phase to finished wafers;
- Cooperation agreement with Denmark’s Stiesdal, to make hydrogen electrolysers using Stiesdal’s innovative technology at a significantly lower cost than other prevalent methods and collaborate in development of other technologies for offshore wind energy, fuel cells, and long duration energy storage.
This week, Reliance also gave a first peek into its tangible plans. It is planning to set up a fully integrated 20 GW module manufacturing plant and commission a 3 GW solar power generating capacity for producing 400,000 tonnes of green hydrogen for captive use at its Jamnagar refinery and petrochemical complex. The company has already sought transmission connectivity for a 500 MW solar project.
The scale, breadth and pace of these deals are breath-taking. Reliance has (rightly) identified access to best-in-class technology as a key plank of its business plan. And it is using its deep pockets for acquisitions and strategic tie-ups to cut the lead time required to become an end-to-end player. All boxes to guarantee success – financial might, access to latest technology, scale, integration, large captive market, larger domestic market and favourable policy – are ticked off.
Reliance’s entry into the clean energy sector will bring down costs for consumers and accelerate overall growth. But its plans must be unnerving for some of the existing players. The company seems poised to disrupt manufacturing and installation businesses.