Aramco explores investment opportunities in RIL’s clean energy unit

Saudi Aramco, along with a group 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-chemical business was called off due to a valuation gap and the need to achieve net-zero emissions targets. As a result, Reliance Industries withdrew an application in a companies court to demerge the business.

The focus over the past year on meeting carbon targets has led to a shift in 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 bring in investors in its renewable energy business. While many investors are excited about the opportunity, Aramco is also asked to evaluate it,” said one of the two people above.

“Reliance and Aramco have a long standing relationship and will continue to explore 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 as appropriate,” the statement added.

A spokesperson for Reliance Industries did not respond to emails till press time.

Reliance Industries had raised more than $30 billion in 2020 by selling stake in its technology and retail units to investors – including Google and Meta – and a rights issue. The person said investment in a clean energy unit could be on similar lines.

The other person said that Reliance Industries will look to invest in its renewable energy game as the world progresses.

Over the next three years, Reliance Industries will build four ‘Giga factories’ to manufacture integrated solar photo-voltaic (PV) modules, electrolysers, fuel cells and batteries to store energy from the grid. It has set a goal of becoming a net-zero carbon company by 2035.

According to Morgan Stanley, Reliance Industries’ plan will make it the largest renewable infrastructure producer with the potential to become an alternative technology supplier to the world, as it exports high-grade refinery fuel.

In the past months, Reliance Industries has struck 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 capabilities and gain access to a global customer base. It acquired a 40% stake in Sterling & Wilson Solar Limited for approx. 2,845 crores.

Additionally, Reliance Industries has invested in technology from Germany’s Nexwave to manufacture competitively priced PV panels and has partnered with Ambari Inc. (an energy storage company) for storage solutions.

“Saudi Aramco only aims to reach net-zero emissions by 2050. Investing in renewable energy assets will help the company advance its goals,” said the second person.

This August, Aramco picked up a 30% stake in Sudair Solar’s $900 million solar project. Sudair Solar is one of the largest planned solar projects in West Asia.