Reliance may earn $10-15 billion revenue from new energy Filesadmin.co by 2030

A report by Sanford C Bernstein stated that by 2030 billionaire Mukesh Ambani’s Reliance Industries could earn between $10-15 billion from its new energy business spanning from solar to hydrogen but would need acquisitions or partnerships to make up for it. Limited expertise in technology.

Clean energy (solar, batteries, electrolyser, fuel cells) is a new growth pillar for Reliance with $2 trillion investment in India till 2050. India targets 280 GW solar capacity and 5 million tonnes of green H2 production by 2030 .

“We expect electric vehicle penetration to be 5 percent for passenger and commercial vehicles and 21 percent for two-wheelers. The total clean energy could reach US$30 billion in 2030 (currently US$10 billion).

In the report, the brokerage said that by 2050, “we estimate that TAM could reach $200 billion and cumulative spending $2 trillion.”

Oil-to-telecom conglomerate Reliance has announced forays into solar manufacturing as well as hydrogen in a pivot away from fossil fuels. Reliance plans to have 100 GW of installed solar capacity by 2030 which is 35 percent of India’s target capacity of 280 GW.

“By 2030, we estimate that Reliance can capture 60 percent, 30 percent and 20 percent of solar, battery and fully hydrogen, respectively,” Bernstein said.

“Based on our assumptions, we estimate that RIL could generate about US$10-15 billion in revenue from the new energy business in 2030 which is about 40 percent of TAM.”

Reliance is building a green energy project to provide India with the equipment it will need for its green energy revolution. Reliance has committed to being a carbon-neutral company by 2035, which is ahead of the goal of any other energy company in the region.

It builds a fully integrated renewable energy ecosystem for customers with solar energy, batteries and hydrogen.

“While Reliance has the balance sheet and relationships, it lacks the technology and manufacturing expertise that would be necessary to succeed,” the brokerage said.

Funding is not an issue for Reliance given its current balance sheet and free cash flow projections.

The Government of India has set a target of 500 GW of installed renewable energy by 2030. Solar is expected to account for the largest share at 280 GW. As of February 2023, India had 65 GW of solar capacity.

To integrate intermittent renewable energy (wind and solar), it is estimated that India needs 88 GWh of Cumulative Energy Storage System (ESS) capacity by 2030 which is 7 percent of the 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 a target of electric vehicle sales penetration of 30 percent for private cars, 70 percent for commercial vehicles, and 80 percent for two-wheelers and three-wheelers by 2030.

“With Indian electric vehicle penetration of just 1 per cent today, we believe this will take longer due to lack of charging infrastructure, lack of affordable EV options and lack of a stable battery supply chain. Two-wheelers will see stronger adoption than other vehicles over 20 per car per cent in 2030 and 75 per cent by 2040 in our view.”

India has set a target of producing 5 million tonnes per annum of green hydrogen by 2030.

“Based on a load factor of 45 percent and an efficiency of 63 percent, we expect that 81 gigawatts of cumulative electrolyzer capacity is required to generate 5 million tonnes of green hydrogen,” the report states. The green hydrogen will be used to replace the gray hydrogen produced using gas. It moves into decarbonization sectors such as oil and fertilizers.

For the new energy business, it is estimated that Reliance will begin recognizing revenue in fiscal ’25 with solar and battery plants starting in 2024.

“Overall, solar will have the most TAM at $13 billion by 2030 followed by hydrogen at $10 billion and batteries at $7 billion. We estimate that Reliance could get $8 billion in revenue from solar. By 2030. For batteries, Reliance could have a takeover of a significant portion of TAM starting in 2025+ and reach $3 billion by 2030. Hydrogen potentially has more opportunities with only $2 billion by 2030 .”

For solar, Reliance expects its installation to reach 100 GWh by 2030. For batteries, Reliance could also achieve a similar 36 percent market share with a battery capacity of 50 GWh versus an expected battery capacity of 139 GWh in 2018. 2030.

For hydrogen, Reliance could capture about 19 percent of the market with a cumulative electrolyser capacity of 16 GW by 2030 against a projected TAM of 81 GW.