The headline of this story could well have been “The Great Disruptors”. But even that would probably not have fully conveyed the extent of the tectonic shift that two canny industrialists have seeded within months of each other. They have not partnered. They probably won’t compete directly either. Yet, the impact of their moves could serve to spark long-term change in an area of national and global interest—renewable energy as a source of electric power, with attendant benefits for our planet’s environmental health. The two gentlemen in question—Mukesh Ambani and Gautam Adani, two of India’s richest men, both ambitious to the point of leaving you incredulous—can sniff out a business opportunity years ahead of the curve. Co-relate the two aspects, and it would appear that renewable energy’s time has truly come. It is good for the planet. It is good for business. And now, it is good business.
On June 24, addressing Reliance Industries shareholders at the company’s annual general meeting, now a regular jamboree of big announcements, Ambani made public a plan to invest ₹60,000 crore to set up four giga factories, which “will manufacture and fully integrate all the critical components of the new energy ecosystem”. In some detail, the plan is to make solar photovoltaic modules, advanced energy storage batteries, electrolysers and, finally, fuel cells. The investment, he said, “will create and offer a fully integrated, end-to-end renewable energy ecosystem”. Another ₹15,000 crore is to be invested in the value chain, partnerships and future technologies. That adds up to ₹75,000-crore ($10-billion) investments in the new energy business over three years. Ambani further said that Reliance will “establish and enable at least 100 GW of solar energy by 2030”.
Ambani $10 billion
OF IT, $8 BN: FOUR GIGAFACTORIES, STORAGE OF INTERMITTENT ENERGY, PRODUCTION OF GREEN HYDROGEN, FUEL CELL FACTORY
THE BALANCE $2BN, FOR VALUE CHAIN, PARTNERSHIPS AND FUTURE TECH, INCLUDING UPSTREAM AND DOWNSTREAM INDUSTRIES
Adani $20 billion
PRIMARILY INTO POWER GENERATION BUSINESS OF SOLAR, WIND. A SMALL PART IS EXPECTED TO GO INTO HYDROGEN POWER
In a late-night statement on November 19, Reliance said the proposed investment to be made by Saudi Arabia’s Aramco in its O2C (oil-to-chemicals) business would be re-evaluated. Importantly, this has been attributed to the “evolving nature of Reliance’s business portfolio”. The deal, announced over two years ago, envisaged Aramco picking up a 20 per cent stake in the O2C business of Reliance.
The statement also makes a mention of Jamnagar, now the base for a major part of the O2C assets, as the centre for “Reliance’s new businesses of renewable energy and new materials, supporting the net-zero commitment”. The thrust on renewable energy, with this announcement, is a clear indication of a new strategy within Reliance.
Meanwhile, on September 21—three months after the Reliance AGM—Gautam Adani addressed the JP Morgan India Investor Summit and declared that his group would invest $20 billion in renewable energy generation, component manufacturing, transmission and distribution over the next decade, embellishing an already significant body of work done by the Adani Group in the past few years. With a portfolio of 25 GW (including operational and in-the-pipeline projects), Adani said this investment “puts us well on track to be the world’s largest renewable power generating company by 2030”. The billionaire went on to point out that of the group’s current EBITDA from utilities, 43 per cent comes from the green business. “Our actions clearly indicate that we are putting our money where our mouth is: Over 75 per cent of our planned capex until 2025 will be in green technologies,” Adani said.
The duo’s proposed cumulative investment of $30 billion (a mammoth ₹2.23 lakh crore) will shake up the 15-year-old renewable energy ecosystem in India, and will go across every form of renewable energy, be it solar, wind, hybrid or even hydrogen. Their paths, however, look different. Ambani’s use of the world “enable” is leading most people to interpret that part of his grand plan is to be a key equipment supplier. On the other hand, Adani is already into power generation, transmission and distribution, and will continue on that path, adding more parts to the whole on the way.
Two months after Adani’s talk, this November, India announced at the 26th United Nations Climate Change conference (better known as COP26) that it would put in place 500 GW of non-fossil energy capacity by 2030 (we have 148 GW as of September 2021). The estimated investment needed (see India’s Hard Drive) is $260 billion or ₹18 lakh crore, about nine times what Ambani and Adani have collectively announced. That huge gap presents a once-in-a-lifetime opportunity for others— the government and the private sector. “We see India’s renewable energy opportunity to be more than 750 GW over the next two decades,” says Rahul Goswami, Managing Director, Greenstone Advisors, an advisory firm with a focus on renewable energy.
Ambani and Adani have obviously seen this opportunity. Neither of the two groups responded to detailed questionnaires from Business Today.
AMBITION OR AUDACITY?
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