Saudi Aramco is exploring an investment in Reliance Industries Ltd’s (RIL’s) clean energy unit, two people aware of the development said, close on the heels of the world’s largest oil company scrapping a $15 billion stake purchase plan in Reliance’s oil-to-chemicals business.
Saudi Aramco, along with a clutch of financial investors, has shown initial interest in investing in Reliance New Energy Solar Ltd, the people said on condition of anonymity.
The Saudi company’s plan to buy a 20% stake in Reliance Industries’ oil-to-chemicals business was called off over valuation differences and the need to achieve net-zero emission targets. Consequently, Reliance Industries withdrew an application in a company court to separate the business.
The focus on meeting carbon goals has sharpened in the past year, altering the investment focus for companies and investors. In June, Reliance Industries chairman Mukesh Ambani pledged to invest $10 billion in clean energy projects over three years.
“Reliance also plans to get investors in its renewable energy business. While many investors are excited about this opportunity, Aramco is also said to be evaluating the same,” said one of the two people cited above.
“Reliance and Aramco have a longstanding relationship and will continue to look for investment opportunities in India,” Aramco said in a statement.
“India offers tremendous growth opportunities over the long term and Aramco continues to evaluate new and existing business opportunities with our potential partners. Updates on any business milestones will be made as and when appropriate,” the statement added.
A spokesperson for Reliance Industries did not respond to emails till press time.
Reliance Industries had in 2020 raised more than $30 billion, selling stakes in its technology and retail units to investors—including Google and Meta—and a rights issue. The investments in the clean energy unit may be on similar lines, the person said.
Reliance Industries will see investments pouring in for its renewable energy play as that is where the world is moving, said the second person.
Over the next three years, Reliance Industries will build four ‘giga factories’ to make integrated solar photo-voltaic (PV) modules, electrolyzers, fuel cells and batteries to store energy from the grid. It has set a target to become a net-zero carbon company by 2035.
According to Morgan Stanley, Reliance Industries’ plans would make it the largest renewable infrastructure producer with the potential to become an alternative technology supplier to the world, similar to how it exports high-grade refinery fuels.
Over the past months, Reliance Industries has stitched four clean energy deals and a partnership for its renewable energy business. It acquired REC Solar Holdings from China National Bluestar (Group) Co. Ltd at an enterprise value of $771 million, enabling it to leverage its panel/polysilicon abilities and gain access to a global customer base. It also acquired a 40% stake in Sterling and Wilson Solar Ltd for about ₹2,845 crore.
Additionally, Reliance Industries has invested in Germany’s NexWafe’s technology to make competitively priced PV panels and partnered with Ambri Inc. (energy storage company) for storage solutions.
“Saudi Aramco has set a goal of reaching net-zero emissions only by 2050. Investing in renewable energy assets will help the company further its goals,” the second person said.
This August, Aramco took a 30% stake in Sudair Solar—a $900 million solar project. Sudair Solar is one of the largest solar projects planned in West Asia.
Source: Mint