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Asia’s richest man plans to invest US$10 billion in green energy

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Indian tycoon Mukesh Ambani unveiled an ambitious clean energy plan involving 750 billion rupees ($10.1 billion) in investment over three years, marking the world’s largest fossil fuel billionaire One of the new pivots.

Reliance Industries Ltd. 60% of its revenue comes from oil refining and petrochemicals. It plans to spend Rs 6,000 crore to build four “super factories” to manufacture solar modules hydrogen, The fuel cell And build a battery The grid stores electricity. The richest man in Asia told shareholders on Thursday that another 150 billion rupees will be invested in value chains and other partnerships.

The Mumbai-based giant reported annual revenue of 63 billion U.S. dollars and is moving towards green, which gives us a glimpse into the new order waiting for some of the world’s major fossil fuel producers. Global giants such as ExxonMobil and TotalEnergies SE have been under pressure to cut their costs. Carbon Footprint, As governments, investors and consumers join the battle climate change with global warming.

At the company’s virtual annual meeting, Ambani rarely explained in detail how he will implement the plan. Last year, he ranked fourth among Bloomberg Green’s global fossil fuel billionaires. Comparing the US$10 billion green investment in three years with the estimates released by Fitch Ratings on Wednesday, Reliance Group’s average annual capital expenditure by March 2025 is US$7.4 billion.

As of 12:41 pm in Mumbai on Friday, the company’s stock price fell 2.4%, its worst week since January.

“Reliance is entering a whole new business,” said Bloomberg Energy Analyst Horace Chan. “Considering the time to acquire technical knowledge and seek strategic partners, this raises concerns about whether these investments can produce acceptable returns and payback periods.”

Ambani has not completely abandoned his traditional oil and petrochemical business. On Thursday, he said that the postponement of Saudi Arabia’s oil company as an investor in the energy sector, announced two years ago, will be completed this year. He did not elaborate. To reassure investors, he also stated that Yasir Al-Rumayyan, chairman of Saudi Aramco, will join the Reliance board of directors.

Radical goal

The proposed green transition is in line with the priorities of the government of Indian Prime Minister Narendra Modi (Narendra Modi), which has been debating aggressive climate targets to reduce net greenhouse gas emissions Emissions By the middle of this century, ten years ago ChinaAlthough Gautam Adani, the tycoon who established a coal-centric mine, port, and power plant group, is already taking a similar path to expand his influence in the wind and solar fields, Anba Nepal’s plan is more ambitious in scope.

“The world is entering a highly destructive new energy era,” said 64-year-old Ambani. “The era of fossil fuels has provided the impetus for global economic growth for nearly three centuries, but it cannot last too long. The large amount of carbon it emits into the environment has endangered life on earth.”

One of Reliance’s “Gigafactory” will produce solar modules, which can achieve 100 GW of solar energy by 2030, including installation on the roofs of villages across the country; the second involves large-scale grid batteries used to store electricity, where Reliance will be Technically cooperate with global leaders; and the third one will build and install electrolyzers for separating green hydrogen from water.

“Starting from nine years, is this feasible? Tim Buckley, director of energy finance research at the Institute of Energy Economics and Financial Analysis, said that this is an extension, not impossible. “One factor is the desire to be consistent with the Indian government and here. Profit in the process. Don’t forget that they have seen Adani make a lot of money in this area. This is not altruism. “

The fuel cell

The fourth plant will be used in a fuel cell plant, which uses oxygen and hydrogen in the air to generate electricity-this technology is being promoted by car manufacturers, including modern Car company, but famously dismissed as “incredibly stupid” Tesla company’s Elon Musk.

The announcement was made a year after India’s most valuable company raised more than US$30 billion by selling shares in its technology and retail divisions and selling shares to existing investors. Reliance brought in Silicon Valley giants such as Google and Facebook Inc. to help it expand its digital and e-commerce footprint at a price of $11 A trillion retail market with a population of more than 1.3 billion.

Since the beginning of April 2020, the inflow of investment that Ambani calls a “vote of confidence” for his business has helped Reliance’s share price rise by more than 90%. According to the Bloomberg Billionaires Index, Ambani’s net worth is approximately US$82 billion.

The Adani-led group is also improving the competitiveness of its clean energy targets. Adani Green Energy Co., Ltd. agreed last month to acquire SoftBank Group’s US$3.5 billion renewable energy business in India to achieve its goal of having 25 GW of renewable energy power generation capacity by 2025. Since the beginning of last year, Adani Green’s share price has risen by more than 580%, and the share price of Adani Total Gas Ltd., a joint venture with TotalEnergies, has risen 670%.

Reliance last year set itself a goal of becoming a net-zero carbon company by 2035-a timeline shorter than the 2050 deadline set by many global peers, including BP Plc. And Royal Dutch Shell. Ambani’s group purchased the first batch of carbon-neutral crude oil in February and said it is looking for more such partnerships.

The Indian government plans to expand its renewable energy production capacity by nearly five times to 450 GW by 2030, as the country aims to reduce its dependence on coal.

Sunil Chandiramani, CEO of Nyka Consulting Services, said: “Reliance’s strategy in energy, data and consumers will ensure that the company continues to grow sustainably to resist all cyclical trends.” However, “it needs to deal with technological innovation and talent recruitment. , Investor expectations and the challenges of global turmoil,” he said.

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