According to a report by Sanford C Bernstein, Reliance Industries, led by Mukesh Ambani, could generate $10-15 billion in revenue by 2023 from its new energy ventures, including solar and hydrogen. However, the company will need to seek acquisitions or partnerships to compensate for its limited technological expertise.
India has set a target of achieving a solar capacity of 280GW and producing 5 million tonnes of green hydrogen by 2030. Reliance sees clean energy, encompassing solar, battery, electrolyzers, and fuel cells, as a significant growth opportunity, with plans to invest $2 trillion in India by 2050.
“We anticipate that electric vehicle (EV) adoption will reach 5% for passenger and commercial vehicles and 21% for two-wheelers. By 2030, the clean energy market could have a total addressable market (TAM) of $30 billion ($10 billion currently),” stated the report.
TAM could reach $200 billion by 2050
The report also predicted that by 2050, the TAM could reach $200 billion, with a cumulative expenditure of $1 trillion. With a pivot away from fossil fuels, Reliance, an oil-to-telecom conglomerate, has entered the solar manufacturing and hydrogen sectors. The company aims to achieve 100GW of installed solar capacity by 2030, which is 35% of India’s target.
“By 2030, we estimate that Reliance could capture 60%, 30%, and 20% of the solar, battery, and hydrogen TAM respectively,” Bernstein stated. “Based on our assumptions, we estimate RIL can generate approximately $10-15 billion in revenue from its new energy business by 2030, representing roughly 40% of the TAM,” the report added.
Reliance’s Commitment to Building a Green Energy Business
Reliance is focused on building a green energy business that supplies the necessary equipment for India’s green energy revolution. The company has committed to becoming a net-zero carbon emission company by 2035, ahead of any other energy company in the region.
Reliance is constructing a fully integrated end-to-end renewable energy ecosystem, incorporating solar, batteries, and hydrogen. However, the report highlights that while Reliance possesses a strong balance sheet and valuable relationships, it lacks the necessary technological and manufacturing expertise for success.
Reliance’s funding is not a concern, given its current balance sheet and projected free cash flow. The Indian government aims to achieve 500GW of installed renewable energy by 2030, with solar accounting for the largest share at 280GW. As of February 2023, India had 65GW of solar power.
India’s Estimated ESS Capacity and EV Sales Penetration
To integrate intermittent renewable energy sources like wind and solar, India is expected to require 88GWh of cumulative energy storage system (ESS) capacity by 2030, which represents 7% of installed solar and wind capacity. By 2050, ESS capacity is projected to reach 15% of total installed wind and solar capacity.
For the transport sector, the Indian government targets an EV sales penetration of 30% for private cars, 70% for commercial vehicles, and 80% for two and three-wheelers by 2030. However, the report indicates that achieving these targets may take longer due to challenges such as the lack of charging infrastructure, affordable EV options, and an established battery supply chain. Nevertheless, two-wheelers are expected to see stronger adoption, reaching above 20% by 2030 and 75% by 2040, according to the report.
India’s Target for Green Hydrogen Production and Reliance’s Revenue Projections
India aims to produce 5 million tonnes of annual green hydrogen by 2030. “Based on a 45% load factor and 63% efficiency, we estimate the requirement of 81GW of cumulative electrolyzer capacity to generate 5 million tonnes of green hydrogen,” the report stated. Green hydrogen is intended to replace grey hydrogen, which is produced using gas, as part of India’s decarbonization efforts in sectors like oil and fertilizer.
Revenue recognition for Reliance’s New Energy business is expected to begin in FY25, with solar and battery plants commencing operations in 2024. The report further projected that solar will have the largest TAM of $13 billion by 2030, followed by hydrogen at $10 billion and batteries at $7 billion. Reliance could achieve $8 billion in revenue from solar by 2030, with potential for a significant market share in batteries starting in 2025+ and reaching a revenue of $3 billion by 2030. The hydrogen sector also presents opportunities, although with revenue projections of $2 billion by 2030.
Reliance is anticipated to achieve 100GW of installed solar capacity by 2030 and a similar market share of 36% in the battery sector with a battery capacity of 50GWh, compared to the projected battery capacity of 139GWh by 2030. In the hydrogen sector, Reliance could capture approximately 19% of the market with 16GW of cumulative electrolyzer capacity by 2030, against an expected TAM of 81GW.
(With PTI inputs)
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.