Monday, June 27, 2005

Reliance going green?

In the post titled Reliance's Power Play, which was basically a round-up of Reliance Energy's big ambitions in the power sector in India, I mentioned that given its track record, Realiance was unlikely to go green like Godrej and Ramco for example. Two things happenned after that, that made me reconsider that idea.

The day of the Reliance Split, Anil Ambani was addressing a press conference live on several channels. During what was looking like a great public wooing exercise, he slipped in that REL remains committed to non-conventional sources of energy - and he only mentioned solar and wind. Solar sounds nice, but mentioning wind obviously meant he was serious. Now a lot of Reliance's foray into the energy sector was based on RIL's oil and gas finds. Thus the biggest-of-its-kind gas plant in UP, and a proposal for a bigger one in Maharashtra. The first indication that there was a move away from oil and gas was the proposed Orissa investment in coal. So this made great sense. REL is moving away from RIL, and a future linked closely to oil and gas, which is no longer "in-house" so to say. Thus it was logical to move into wind. (Actually non-conventional sources were also mentioned at the REL AGM slightly earlier in the month too).

Next came the announcement today, that Reliance Energy and GE were setting up India's largest wind power project at 500 MW capacity, by 2007. So does this speak of a new leaf.

Not entirely. As part of the Electricity Act 2003 the government of India mandated that all power distributors ensure that a certain percentage of their power comes from renewable sources, and that just might have forced Reliance's hand. Also, despite the size of the investment relative to others in the industry, it would provide a very small percentage of the total power Reliance plans to produce and/or distribute in the near future.