Reliance's green energy biz likely to contribute 10% of EBITDA in 5 yrs
The oil-to-retail conglomerate will spend $10 bn on the new energy biz over the next 3 years towards achieving the framed targets
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NewDelhi: Billionaire Mukesh Ambani's Reliance Industries Ltd has made a wave of partnerships to give shape to its green energy business that spans solar, battery and hydrogen investments and could contribute almost 10 per cent of the company's pre-tax profits in five years, a report said.
The oil-to-retail conglomerate announced a wave of partnerships with REC, NexWafe, Sterling and Wilson, Stiesal and Ambri for total costs of $1.2 billion. "With these investments, Reliance has acquired the expertise and technology portfolio to build a fully integrated end-to-end renewables energy ecosystem through solar, batteries and hydrogen," brokerage Bernstein said in a report. Reliance is expected to continue to invest in technology such as fuel cells and key materials for the clean energy sector. "Based on our assumptions, we believe the new energy business could contribute almost 10 per cent of the company's total EBITDA by FY26 assuming all the factories are constructed and ramped up on the company's timeline," it said.
"This will make Reliance a highly diversified conglomerate spanning E&P, refining, petrochemicals, clean energy, telecoms, retail and internet, although we suspect that the company will be split up given the inefficiency of such a corporate structure." Reliance still needs the technology for fuel cell development, which the company is expected to acquire or license from one of the industry leaders such as Plug Power, Ballard, or Ceres. It may also need to invest in key suppliers for the sector such as manufacturers of cathode, separator and electrolyte for battery manufacturing and could also invest in MEA, catalysts and bipolar plates for fuel cell manufacturing.
The company is targeting solar manufacturing of 100 GW and green hydrogen costs of $1 per kg by 2030. It will spend $10 billion on the new energy business over the next 3 years towards achieving these targets. "Based on capex for clean energy, we see a route to Reliance building a clean energy business, which could be worth $36 billion," Bernstein said.
