Reliance Energy will transform business: Morgan Stanley

Over the next few decades, the world will need to radically change the way energy is produced and consumed.

Morgan Stanley said in a report that Reliance is embracing this change and is investing in providing green infrastructure solutions to fuel this change through silicon and hydrogen.

“The strategy is to provide supporting infrastructure in the areas of hydrogen, integrated solar PV and grid batteries – all sectors with high entry barriers, technological advancements and good returns,” it said.

The oil-to-telecom conglomerate plans to build four giga-factories offering the full spectrum of renewable/distributed energy solutions, as it capitalizes on India’s quartz and silicon resources.

The focus on the hydrogen value chain offers significant opportunities to decarbonize energy operations, compliment energy storage with batteries and potentially export green ammonia.

“Reliance’s approach is unique in that it is taking a leaf out of European oil companies to become a catalyst for electrons, with less focus on producing them, and like the US majors it is taking a leaf out of synergistic decarbonization areas (the existing ones) like carbon. operations) capture, hydrogen and even biofuels,” the brokerage said.

The plan will make Reliance the largest renewable infrastructure producer with the potential to become an alternative technology supplier to the world within the current geopolitical framework, as it exports high-grade refinery fuel.

“Over the past decade, Reliance’s investments in technology generated value creation of USD 125 billion from scratch, and we see investments in green energy infrastructure as the key to outperforming the next decade,” the firm noted. Adding to this, Telecom data offerings have stunned the market in the last decade and a half.

And silicon and hydrogen are expected to emerge as the ‘new oils’ of the next decade for Reliance, with the potential for up to US$60 billion in value creation by 2025 if things go downhill.

“The new energy Ebitda capacity is now as large as the contribution from Reliance’s petrochemical business, but we expect it to be many times larger,” Morgan Stanley said.

Noting that there are many catalysts in the near term, it said chemical prices are rising, gasoline margins are at multi-year highs, and demand is starting to improve. In addition, broadband subscribers are increasing and gas production is increasing at a time when global gas markets are tightening and prices are changing.

“The investments are not without risk in execution/technology changes. However, given the large domestic market and global focus on diversifying sourcing of solar panels and batteries, the hurdle for Reliance to take market share is not as high, but the cost Competitiveness vs China This is the key.

“Adoption of untested technologies such as rapidly falling prices of liquid metal and hydrogen electrolysers are other challenges,” it added.