Mukesh Ambani-led Reliance Industries could earn $10-15 billion by 2023 from its new energy business spanning solar to hydrogen, but limited expertise in the technology will require acquisitions or partnerships, PTI reports Sanford C Bernstein. Citing a report told. sunday.
India is targeting 280GW of solar capacity and 5 million tonnes of green H2 production by 2030. Clean energy (solar, batteries, electrolyzers and fuel cells) represents a new growth pillar for Reliance with an investment of US$2 trillion in India by 2050.
“We expect EV penetration to reach 5 per cent for passenger and commercial vehicles and 21 per cent for two-wheelers. Clean energy could have a TAM (total addressable market) of USD 30 billion in 2030 (currently 10 billion). billion USD).
TAM could reach $200 billion by 2050
The report states that by 2050, TAM could reach $200 billion and the cumulative cost could be trillions of dollars. Oil-to-telecom conglomerate Reliance has announced its foray into hydrogen along with solar manufacturing in a pivot away from fossil fuels. Reliance plans to have 100GW of installed solar capacity by 2030, which is 35 percent of India’s target of 280GW.
“By 2030, we estimate that Reliance could capture 60 percent, 30 percent, and 20 percent of solar, battery, and hydrogen TAM, respectively,” Bernstein said. “Based on our assumptions, we estimate that RIL could generate around USD 10-15 billion in revenue from the new energy business in 2030, representing around 40 per cent of TAM,” it added.
Reliance is building a green energy business
Reliance is building a green energy business to supply equipment needed for the green energy revolution. Reliance has committed to become a net zero carbon emission company by 2035, which is ahead of the target of any other energy company in the sector.
The company is building a fully integrated end-to-end renewable energy ecosystem for customers through solar, batteries and hydrogen. “Reliance has the balance sheet and relationships, but lacks the technology and manufacturing know-how that will be essential for success,” the brokerage said.
Funding is not an issue for Reliance given the current balance sheet and free cash flow outlook. The Government of India has set a target of 500GW of renewable energy installed by 2030. Of this, solar is expected to account for the largest share with 280GW. By February 2023, India would have 65GW of solar power.
India is estimated to need 88GWh ESS capacity by 2030
To integrate constrained renewable energy (wind and solar), India is estimated to need 88GWh cumulative energy storage system (ESS) capacity by 2030, which is 7 percent of installed solar and wind capacity. By 2050, ESS capacity is expected to reach 15 percent of total installed wind and solar capacity.
For transportation, the Indian government has set an EV sales target of 30 percent for private cars, 70 percent for commercial vehicles, and 80 percent for two-wheelers and three-wheelers by 2030.
“Today EV penetration in India is only 1 per cent, we think it will take much longer due to lack of charging infrastructure, lack of affordable EV options and no established battery supply chain. Two-wheelers to reach above 20 per cent Will have a chance to see stronger adoption than other vehicles.” per cent in 2030 and 75 per cent by 2040, in our view,” the report said.
India has set a target of 5 million tonnes of annual green hydrogen production by 2030
India has set a target of 5 million tonnes of annual green hydrogen production by 2030. It states that green hydrogen is to be used to replace gray hydrogen produced by using gas as it goes to decarbonise sectors such as oil and fertiliser.
For the New Energy business, it is estimated that Reliance will start recognizing revenue in FY25 with the commissioning of solar and battery plants in 2024.
“Overall, solar will have the largest TAM at USD 13 billion by 2030, followed by hydrogen at USD 10 billion and batteries at USD 7 billion. We estimate that Reliance will generate USD 8 billion in revenue from solar by 2030. For batteries, Reliance is likely to capture a major portion of TAM starting from 2025+ and reach USD 3 billion by 2030. Hydrogen has potential with only USD 2 billion by 2030. There are more opportunities.”
For solar, Reliance hopes to reach an installation of 100GW by 2030. For batteries, Reliance could achieve a similar market share of 36 percent in 2030 with a battery capacity of 50GWh as against an expected battery capacity of 139GWh.
For hydrogen, Reliance could capture about 19 per cent of the market by 2030 with 16GW of cumulative electrolyzer capacity, as against an expected TAM of 81GW.
(With PTI inputs)