The world is entering a new energy era and Mukesh Ambani wants to be a part of it, Energy News, ET EnergyWorld
Indian tycoon Mukesh Ambani has unveiled an ambitious clean energy push involving 750 billion rupees ($ 10.1 billion) of investment over three years, marking a new pivot for one of the biggest fossil fuel billionaires in the world.
Reliance Industries Ltd., which derives 60% of its revenue from petroleum refining and petrochemicals, plans to spend Rs 600 billion on four “gigantic factories” to manufacture solar modules, hydrogen, fuel cells and to build a network of batteries to store electricity. Another 150 billion rupees will be invested in the value chain and other partnerships, Asia’s richest man told shareholders on Thursday.
The Mumbai-based giant’s switch to green, which has reported annual revenue of $ 63 billion, offers a glimpse of the new order awaiting some of the world’s major fossil fuel producers. Global giants such as Exxon Mobil Corp. and TotalEnergies SE have come under pressure to reduce their carbon footprint, as governments, investors and consumers team up to fight climate change and global warming.
Speaking at the company’s virtual annual meeting, Ambani gave few details on how he would execute the plan. He was ranked # 4 among global fossil fuel billionaires by Bloomberg Green last year. The $ 10 billion green investment over three years compares to a Fitch Ratings estimate – released Wednesday – of $ 7.4 billion in average annual capital spending by the Reliance group through March 2025.
The company’s shares fell 1.9% on Friday at 9:37 a.m. in Mumbai, extending the declines after their biggest loss in more than two months the previous day.
“Reliance is branching out into whole new businesses,” said Horace Chan, energy analyst at Bloomberg Intelligence. “This raises concerns about whether the investments could generate an acceptable return and payback period, given the time to acquire technological know-how and seek strategic partners.”
Ambani is not completely turning its back on its old oil and petrochemical company. On Thursday, he said a delayed plan to bring Saudi Arabian Oil Co. into the energy division as an investor – announced two years ago – would be finalized this year. He didn’t elaborate. In order to reassure investors, he also said that Aramco chairman Yasir Al-Rumayyan would join Reliance’s board of directors.
The proposed green transformation aligns with the priorities of Prime Minister Narendra Modi’s government, which has debated aggressive climate targets that would reduce net greenhouse gas emissions to zero by mid-century, a decade before. China. Although his fellow magnate Gautam Adani, who built a coal-centric mining, port and power plant conglomerate, is already following a similar path by expanding his presence in wind and solar power, Ambani’s plans are more ambitious in scope.
“The world is entering a new energy era, which is going to be very disruptive,” said Ambani, 64. “The era of fossil fuels, which fueled global economic growth for nearly three centuries, cannot last any longer. The huge amounts of carbon it released into the environment endangered life on Earth. “
One of Reliance’s “gigantic factories” will manufacture solar modules, delivering 100 gigawatts of solar power by 2030, including on rooftop installations in villages across the country; the second involves large-scale grid batteries to store electricity, for which Reliance will collaborate with world leaders on technology; and the third will build and install electrolysers to separate green hydrogen from water.
“Can it be done from scratch in nine years?” It’s overkill, it’s not impossible, ”said Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis. “There is an element of wanting to align with the Indian government and capitalize on the process. Remember, they saw Adani making a lot of money in it. It is not altruism.
The fourth plant would be for fuel cells, which use oxygen from the air and hydrogen to generate electricity – a technology promoted by automakers, including Hyundai Motor Co., but known to be “d ‘mind-blowing stupidity’ by Tesla Inc. Elon Musk.
The announcement comes the year after India’s most valuable company raised more than $ 30 billion in sales shares in its tech and retail units, and through a sale of shares to existing investors. Reliance turned to Silicon Valley giants such as Google and Facebook Inc. to help it grow its digital and e-commerce footprint in a $ 1 trillion retail market of over 1.3 billion dollars. people.
Inflows of investment, which Ambani called a “vote of confidence” in its companies, have helped Reliance shares rebound by more than 90% since early April 2020. Ambani’s net worth is around 82 billion dollars, according to the Bloomberg Billionaire Index.
The group led by Adani is also elevating its game in clean energy goals. Adani Green Energy Ltd. agreed last month to buy the renewable energy business of SoftBank Group Corp. $ 3.5 billion in India, with the goal of meeting its goal of having 25 gigawatts of renewable energy capacity by 2025. The green focus has led to a share rally with Adani Green leaping more of 580 percent and Adani Total Gas Ltd. – a joint venture with TotalEnergies – by 670 percent since the start of last year.
Last year, Reliance set a goal of becoming a zero-carbon company by 2035 – shorter than the 2050 target set by many of its global peers, including BP Plc. and Royal Dutch Shell Plc. Ambani’s group bought its first shipment of carbon-neutral crude oil in February and said it was looking for more such partnerships.
The Indian government plans to increase its renewable energy capacity fivefold to 450 gigawatts by 2030, as the country aims to reduce its dependence on coal.
“Reliance’s energy, data and consumption strategy will ensure that the business continues to grow sustainably against all cyclical trends,” said Sunil Chandiramani, Managing Director of Nyka Advisory Services. However, “it will have to meet the challenges of technological innovation, talent acquisition, investor expectations and global turmoil,” he said.