Ambani’s new energy bet

This is Ambani’s three-step plan to replicate Jio’s success with renewables:

Meanwhile, Ambani’s Reliance isn’t the first company in India to shift its focus to the green and renewable energy sector in a country that’s still heavily dependent upon coal. In 2019, from April to December, private companies invested around Rs37,000 crore ($5 billion) in renewable energy.

On June 22, state-owned NTPC, India’s largest energy conglomerate, announced that it will double its renewable energy capacity to 60 GW.

Similarly, in March, Adani Green Energy signed a contract to acquire a 100% stake in SkyPower Global’s 50 MW solar power project in Telangana. This deal will increase its operational renewable capacity to 3,395 MW and the total renewable portfolio to 14,865 MW. In the same month, India and the US restructured their strategic energy partnership to concentrate on cleaner energy sectors including biofuels and hydrogen production.

“Companies that are still betting big on fossil fuels have seen shareholder value erosion, and so increasingly, there is pressure from the boardroom to invest sustainably,” Garg of IEEFA explained.

The future for India’s renewable sector

India’s nascent renewable sector is full of opportunities and is constantly growing. With an installed renewable energy capacity of 94.43 GW (as of February 2021), it has attracted investment worth $42 billion since 2014, according to the Indian Brand Equity Foundation (IBEF), the state-owned export promotion agency.

According to the IBEF, India could see investments of around $500 billion in its new energy industry by 2028. By 2040, the IBEF also says, around 49% of the total electricity in India will be generated by renewable energy, with more efficient batteries used to store power, which will in turn cut solar energy costs by 66%.

However, if that happens, the use of renewables in place of coal will save India Rs 54,000 crore ($ 8.4 billion) annually.

Meanwhile, despite the $10 billion investment announcement, industry experts believe that Reliance could do better.

“Given RIL’s past investments in the petrochemicals and telecom sectors, the scale of this announcement is relatively small,” says Ashish Fernandes, CEO at Climate Risk Horizons, a Bengaluru-based climate research group. “However, it is an indicator that big business is starting to understand that the era of fossil fuel power expansion is ending much faster than expected.”

Emphasizing the need to take green energy more seriously, Fernandes warned investors in the coal and oil and gas sector against any new fossil fuel investments.

“These are outdated legacy investment plans that need to be re-examined in light of the rapid changes in energy economics,” he adds. “Continuing to push fossil fuel investments that are destined to be stranded will have serious negative repercussions on the Indian economy.”

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