RIL arm takes first step in solar power arena

Mumbai: India’s most valuable company by market capitalization that gets nearly all its revenue from processing crude and selling its derivatives, Reliance Industries Ltd (RIL), is quietly working on a plan to harness solar energy.

The segment is a new growth driver outlined by the management at an investor meet less than a month ago.

A division under the oil-to-yarn and retail conglomerate has received global safety and quality certifications for about 20 “photovoltaic (PV) modules”, or an assembly of solar cells that can convert sunlight into electricity.

While the Mukesh Ambani-owned RIL is keeping its business plans under wraps, a sector expert said that the move would be a toehold for a company that is venturing into the field.

A Yokohama-based testing and assessment firm TUV Rheinland Japan Ltd had said at the end of last month that the Reliance Solar Group had been successful in obtaining certification for its PV modules.

Selected samples verified “compliance with relevant standards and requirements” and “periodic quality and production control tests” were performed at the manufacturing sites to ensure that all units produced use the same materials and processes, said a release on the website of the Reliance Solar division.

Tests and certifications confirm the reliability of a manufactured product. The certification is also a precondition for accessing funds nationally and globally.

Emails sent to an RIL spok-esman last week went unanswered while calls and an email to Rabindra Kumar Satpathy, president of this initiative, were not responded to.

An RIL source familiar with the development said it was too early to make any specific comment as the company is still figuring out how to scale up the model and reduce costs, depending on the feedback from the pilot studies.

Addressing the firm’s shareowners at its annual general meeting in November, Ambani gave a hint of things to come while counting five “platforms for value creation”.

“The third platform for value creation would be in the renewable energy space, as a natural extension of our conventional energy platform,” Ambani had said at the meeting. “Our efforts would be on piloting projects in alternative energy.”

“Research and proof-of-concept projects in biofuels, solar energy and fuel cells...would characterize these efforts,” he had said.

The recent certifications bear out the evidence of “these efforts”.

Kuljit Singh, partner with audit and consultancy firm Ernst and Young (E&Y) in India, sees a larger game plan in the development.

According to Singh, who has researched the arena of renewable energy, PV modules could be the first step towards getting into the complete solar energy chain.

“Getting a solar module certification is not too difficult. Further, a module is a low value-add item and, hence, any player wanting to make a meaningful presence in the solar space should view modules as only a first step and will need to undertake backward and forward linkage into wafers, cells and system integration,” he said.

“Additionally, as a long-term plan, such a player would also need to have a conscious strategy for getting into the technology aspects of solar power so as to increase the efficiency of solar power generation and bring it closer to conventional means of power generation,” Singh added.

It could not be ascertained which way RIL’s plans on the solar initiative are headed.

According to the website India Energy Portal, set up by the New Delhi-based environment think tank, The Energy and Resources Institute, on behalf of the National Knowledge Commission, India receives solar energy equivalent to at least 5,000 trillion kWh every year—far more than the total energy consumption of the country.

Through PV cells, solar radiation gets converted into DC (direct current) electricity and can then be used for a number of applications such as domestic and street lighting, pumping water, desalination of water, powering remote telecommunication centres and railway signals, the portal added.

The website of Reliance Solar states that it has set up a 30MW facility for making PV modules, with the capability to make units of different ratings up to 250W.

According to E&Y’s Singh, investments of at least $20 billion (Rs92,800 crore) have been announced in the sector by various Indian companies, including one envisaged at $7 billion by RIL.

SemIndia Systems Pvt. Ltd, Moser Baer India Ltd and Nano-Tech Silicon India Pvt. Ltd were among the others, he said.

India’s solar potential is among the highest in the world and its installed manufacturing capacity swelled from a meagre 10MW in 2000 to 335MW in 2007, said Singh.

The path is laced with challenges, though. Generating power from trapping solar energy costs about Rs15 per kWh, or five times more than what it costs to use coal, a conventional and non-renewable resource, to generate the same amount of energy.

The India Energy Portal estimates that 87.5% of the country’s land area is covered by agriculture, forests and fallow land; 6.7% by housing and industry, and 5.8% is barren, snow-bound or generally inhabitable.

The potential area that can be used for solar energy installations is 12.5%, or 0.413 million sq. km, according to the website. As solar energy is “a dilute source...large areas are needed for collection”.