RIL’s new investment cycle to focus on solar, battery factories in FY25

Reliance Industries (RIL), India’s largest company by market capitalisation, is expected to focus its resources on building new energy projects - majorly the five giga factories in Jamnagar, Gujarat - beginning the new financial year starting April 1 as its major capital expenditure in 5G network expansion is about to conclude. Reliance Jio has nearly completed pan-India deployments of their 5G networks. With this, more capital allocation and technology development and tie-ups will be seen in the new energy portfolio of the company in FY25, say experts.

The petroleum giant targets to commission 20 giga watt (GW) of solar power generation project by 2025. The power will be fully utilised for its green hydrogen production. RIL’s solar energy ecosystem will be converting sand into solar PV modules, said RIL chairman Mukesh Ambani in the last annual general meeting. The solar giga factory will include manufacturing of photovoltaic (PV) modules, cells, wafers and ingots, polysilicon, and glass. The company aims to bring the factory on-stream in a phased manner by the end of 2025.

In addition, RIL is also pursuing a wind turbine manufacturing ecosystem. RIL wants to enable the installation of at least 100 GW of renewable energy generation by 2030. It will set up the battery giga factory by 2026 to manufacture battery chemicals, cells and packs, besides containerised energy storage solutions, and a battery recycling facility.

In the previous investment cycle, the telecom arm Reliance Jio invested $13-14 billion (₹1.08-1.16 lakh crore) to roll out its 5G standalone network, says rating agency Fitch. The company has been investing in retail store expansion as well as building the newly launched FMCG business with acquisitions of brands.

The conglomerate had earlier earmarked ₹75,000 crore for building five giga factories in Jamnagar. Ambani earlier said that the company was ready to double its investment to scale up the new energy manufacturing ecosystem. He intends to lower the cost green hydrogen to $1 a kilogram in a decade.

According to Goldman Sachs Research, the capex in new energy will take place in two phases – first on upstream manufacturing, where RIL has planned $10 billion investment for completing integrated solar and battery manufacturing plants by the end of FY27. “Much larger capex outlay in our view will be linked to the planned second phase of deployment, where RIL may potentially set up solar downstream, electrolyser and wind capacities for new energy production,” the research agency said in its recent report.

The conglomerate, which is looking to branch out to carbon-neutral energy, targets to commission a series of projects this year. In February 2023, the company unveiled its first hydrogen internal combustion engine technology for heavy-duty trucks and buses. It is also exploring hydrogen fuel cell technology solutions and is partnering with auto manufacturers.

Ambani earlier announced the construction of five giga factories--- integrated solar photovoltaic module factory, an advanced energy storage battery factory, an electrolyser factory, a fuel cell factory, and a power electronics factory-- to create an ecosystem to generate 100 GW solar power by 2030 and achieve net carbon zero status by 2035.

It partnered with leading companies globally in solar, battery, and ectrolyser space. The giga factories are under construction in 5,000 acres of land in Jamnagar to build Dhirubhai Ambani Green Energy Giga Complex. It has two refineries and a petrochemical complex in the vicinity.

RIL’s share price jumped 3.49% to close at ₹2,983 a piece on Wednesday. The market cap stood at ₹20.21 lakh crore.