Explaining the Ambitious Expansion of Mukesh Ambani into Renewable Energy




India facing a Coal Shortage is in the news recently, to what extent is this true is a different topic altogether but the global economy facing power cuts definitely is. The problem with India and the Rest of the world is, we are more vulnerable to it as the infrastructure for renewable energy is not yet matured. And we all are aware of the Vision of Mukesh Ambani, proof of which is 'JIO', how it took the telecom industry by storm in India. Now that the same person has already invested close to $12 billion in green and renewable energy, it's high time we take a look at those investments and has Mukesh Ambani identified green and renewable energy as the 'New Oil' as he did with JIO a few years back? Let's see that in today's Pill

It all began when on 10th October 2021 Reliance New Energy Solar Ltd (RNESL), a wholly-owned subsidiary of Mukesh Ambani-led Reliance Industries Ltd, announced that it had acquired a 100% stake in Norway-based solar cell, panel, and polysilicon maker REC Solar Holdings AS for Rs 5,792 cr. After which it was no looking back, the company went on to announce that it plans to buy a 40% stake in Shapoorji Pallonji-backed Sterling and Wilson Solar Ltd (SWSL) for Rs 2,845 crores.

The list goes on and the investment of RNESL reached $12 billion in green and renewable energy with specifical investments in silicon and hydrogen. Reliance is already looking to capitalize on the hydrogen electrolyzer opportunity which can become a 3-4 GW market in India alone. For the uninitiated hydrogen electrolyzer is a system that uses electricity to break water into hydrogen and oxygen in a process called electrolysis through which the electrolyzer system creates hydrogen gas which is used in a fuel cell to generate electricity. So yeah, in all the possibilities are immense for hydrogen gas.

The other part of the 'New Oil' is Silicon, which can be used in a Lithium-silicon battery that employs a silicon-based anode and lithium ions as the charge carriers. And as the Electric vehicle market is booming, this can be a game-changer for RNESL.

Here is what Top brokerage houses have to say about RIL's ambitious plan

Morgan Stanley says
RIL could generate a potential value of close to $60 billion from its initial investment in green technology. According to the brokerage, the operating profit of RIL’s new energy business could match that of the petrochemical operations today albeit with higher valuation multiples.

Kotak Institutional Equities says
RIL’s $3 billion investment in setting up 10GW of integrated solar capacity could generate an operating profit of Rs. 4,600 crore in a steady-state environment.

Conclusion
Given that the initial investment of billions of dollars in JIO has paid a handsome dividend, with value creation of more than $100 billion in a market in which it had to carve out a place, then the market in which the RIL is spreading now is still very less competitive at least in India. What is remaining to see is that Can Mukesh Ambani turn this 'New Oil' into a pot of gold?

Well that for time to decide, for now, if you

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Disclaimer

The above information is to spread financial literacy. We are not SEBI registered financial advisors, kindly consult your financial advisor before making any investment decision.


Sources

RIL is metamorphosing again to tap 'new oil'; and that's not data - The Economic Times (indiatimes.com)

Hot moves: Reliance New Energy announces ₹8,600 cr worth buys - The Hindu BusinessLine

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