Reliance, Brookfield sign pact to produce renewable energy

Barely a week after Reliance Industries (RIL) signed a deal to acquire a 33.33% stake in a joint venture set up by Canada-based Brookfield Infrastructure and Digital Realty for developing data centers in India, billionaire Mukesh Ambani-led conglomerate has inked a pact with Brookfield Asset Management to produce renewable energy.

In an exchange filing this morning, RIL says it has signed a memorandum of understanding (MoU) with Brookfield Asset Management to explore opportunities to manufacture renewable energy and decarbonisation equipment in Australia.

Brookfield Asset Management (BAM) is a leading global alternative asset manager with around $825 billion of assets under management across renewable, infrastructure, real estate, private equity, credit and other.

“The MoU aims to both accelerate and de-risk Australia’s energy transition by enabling it to locally produce clean energy equipment such as PV modules, long duration battery storage and components for wind energy,” RIL says in a BSE filing.

Under the terms of the agreement, Brookfield will work with Reliance to explore avenues of direct capital investment and development of skills, knowledge and expertise in the renewable energy sector of Australia to facilitate the nation’s transition to a net zero future.

As per the release, Reliance and Brookfield will evaluate the establishment of advanced operations in Australia to make/or assemble equipment used in the construction of renewable energy projects supplying equipment to all players in the market including Origin Energy Markets. “Reliance has strong expertise in solar panel technology and long duration battery storage technology. It is currently in the process of setting up one of the world’s largest integrated renewable energy manufacturing facilities in India.”

The renewable energy deal aims to bring global manufacturing technology and expertise to Australia.

In March this year, Brookfield signed a binding agreement with EIG to acquire Origin Energy. The proposed acquisition is currently going through the relevant approvals processes. As part of its proposed acquisition of the Origin Energy Markets division, Brookfield along with its institutional partners and global institutional investors GIC and Temasek have set out a plan to invest between $20 billion (Australian dollar) and A$30 billion over the next ten years to accelerate its energy transition.

The MoU intends to ensure consistent and adequate supply of the clean energy equipment required to develop up to 14 GW of new, large-scale generation and storage capacity in Australia. Independent analysis undertaken for Brookfield indicates the establishment of onshore sovereign manufacturing capability for the energy transition has the potential to create approximately 18,000 direct and indirect jobs, many in regions most impacted by the transition such as the Hunter Valley in New South Wales and the La Trobe Valley in Victoria.

“We are confident that Reliance and Brookfield will explore avenues in green energy in Australia, accelerating the nation’s transition to a Net Zero future and providing a fillip to the global green energy movement,” says Anant Ambani, Director, Reliance New Energy.

The release further states that Brookfield is uniquely placed to support these manufacturing initiatives given its track record in committing long-term capital to enable the energy transition, and its innovative approach to largescale investments in re-shoring of essential and strategic manufacturing processes and supply chains such as its investment in the US$30 billion Intel Chip plant in Nevada.

Earlier on July 24, 2023, RIL entered into a pact to invest alongside Brookfield Infrastructure and Digital Realty in their Indian SPVs (special purpose vehicles) set up for developing data centres in India. RIL will hold a 33.33% stake in each of the Indian SPVs and become an equal partner. The JV is currently building data centres in Chennai and Mumbai.

Meanwhile, shares of RIL dropped as much as 1% to ₹2,521.90 after opening flat at ₹2,547.85 on the BSE.