Reliance Industries eyes USD 10-15 bn revenue from new energy by 2030

Reliance Industries eyes USD 10-15 bn revenue from new energy by 2030

Mukesh Ambani’s Reliance Industries Ltd (RIL) may earn nearly USD 10-15 billion from its new energy business spanning solar to hydrogen by 2023.

Still, it will need acquisitions or partnerships to compensate for limited technological expertise, according to PTI on 19, June 2023, citing a report by Sanford C Bernstein.

With USD 2 trillion in investment in India through 2050, clean energy (solar, battery, electrolyzers, and fuel cells) represents a new growth pillar for Reliance. By 2030, India hopes to have 280GW of solar capacity and 5 million tonnes of green H2 production.

 “We expect EV penetration will reach 5% for passenger and commercial vehicles and 21% for two-wheelers. Clean energy could have a TAM (total addressable market) of USD 30 billion in 2030 (USD 10 billion currently). By 2050, we estimate the TAM could reach USD 200 billion and cumulative spending of USD 2 trillion,” PTI quoted in the brokerage report. 

Reliance Industries, an oil-to-telecom conglomerate, has announced forays into solar manufacturing and hydrogen to transition away from fossil fuels. 

Reliance plans to have 100GW of installed solar capacity by 2030, accounting for 35% of India’s total capacity target of 280GW.

 “By 2030, we estimate Reliance could capture 60 percent, 30%, and 20% of solar, battery, and hydrogen TAM respectively,” Bernstein said. “Based on our assumptions, we estimate RIL can achieve around USD 10-15 billion of revenue from new energy business in 2030 which represents roughly 40% of the TAM.” 

Reliance is developing a green energy business to supply the equipment required by India’s green energy revolution. 

Reliance has committed to becoming a zero-carbon company by 2035, which is earlier than any other energy company in the region.

Through solar, batteries, and hydrogen, it is constructing a fully integrated end-to-end renewable energy ecosystem for customers.

“While Reliance has the balance sheet and relationships, they lack the technology and manufacturing know-how which will be essential for success,” the brokerage said. 

Given the current balance sheet and free cash flow outlook, funding is not an issue for Reliance.

India is estimated to require 88GWh of cumulative energy storage system (ESS) capacity by 2030 to integrate interruptible renewable energy (wind and solar), representing 7% of installed solar and wind capacity. ESS capacity is expected to account for 15% of total installed wind and solar capacity by 2050.

The Indian government has set an EV sales penetration target of 30% for private cars, 70% for commercial vehicles, and 80% for heavy vehicles.

The Indian government has set a target of 30% EV sales penetration for private cars, 70% for commercial vehicles, and 80% for two and three-wheelers by 2030.

“With India’s EV penetration at only 1% today, we think this will take longer given the lack of charging infrastructure, lack of affordable EV options, and no established battery supply chain. Two-wheelers will see stronger adoption than other vehicles reaching above 20% in 2030 and 75% by 2040 in our view,” the report said. 

India has set a goal of producing 5 million tonnes of green hydrogen annually by 2030.

“Based on 45% load factor and 63% efficiency, we expect 81GW of cumulative electrolyzer capacity is required to generate 5 million tonnes of green hydrogen,” it said adding green hydrogen is to be used to replace grey hydrogen, produced using gas, as it moves to decarbonize sectors such as oil and fertilizers. 

India has set a goal of producing 5 million tonnes of green hydrogen annually by 2030.

 “Overall, solar will have the largest TAM of USD 13 billion by 2030 followed by hydrogen at USD 10 billion and batteries at USD 7 billion. We estimate Reliance can obtain USD 8 billion of revenue from solar by 2030. For batteries, Reliance could potentially capture a large part of the TAM starting in 2025+ and reach USD 3 billion by 2030. Hydrogen has potentially more opportunities with only USD 2 billion by 2030.” 

Reliance expects to reach 100GW of solar installation by 2030. Reliance could achieve a similar market share of 36% in batteries with a battery capacity of 50GWh versus the expected battery capacity of 139GWh in 2030.

Reliance can capture about 19% of the hydrogen market with 16GW of cumulative electrolyzer capacity by 2030, compared to an expected TAM of 81GW.

Content Credit: ET Auto