The Mukesh Ambani-promoted Reliance Industries (RIL) made an important statement last weekend. On Sunday, it announced RIL’s subsidiary, Reliance New Energy Solar, had made two clean energy acquisitions. The first was REC Solar Holdings from China National Bluestar Company at an enterprise value of $771 million. REC is a leading international solar energy company headquartered in Norway. Later, RIL said it was buying a 40% stake in Sterling & Wilson Solar Ltd, a Shapoorji Pallonji (SP) Company, for a consideration of about Rs 2,845 crore. These acquisitions come close on the heels of Reliance’s new Rs 75,000-crore push into green energy.
With these acquisitions, Reliance is putting its money where its mouth is. Thermal power, produced by coal-fired plants, has been black-listed by the environmental community. Internationally, such plants are on the way out. However, in India they are still the mainstay of our energy production, contributing as much as 71% of the electricity consumed. International climate agreements have pledged to stop coal-based electricity production as burning of fossil fuels releases greenhouse gases. These increase the levels of CO2, trapping heat and contributing to global climate change. Seeing the writing on the wall, Reliance wants to cash in on the future course of the energy revolution.
It is laudable that renewable energy sources have grown quite rapidly in India. From barely 20 GW installed in 2010, renewable energy—wind, water, solar—accounts for 142 GW or 37% of the total capacity now, little over a decade later. Reliance’s push into renewables comes at a time when the country is going through a power crisis forced by shortage of coal. Though the Centre has been denying it, the last weekend saw coal shortages beginning to bite, with states like UP and Rajasthan reporting several hours of outages. This should be a trigger for the conversion process to move faster. Significantly, we will probably see the Ambanis crossing swords with the Adanis, whose Adani Green Energy Ltd has also pledged to develop a portfolio of 25GW of renewable energy assets by 2025. No harm done, from the country’s point of view, as the more green sources there are, the merrier.