Indian Reliance Industries (RIL) [RIL:IN] is considering acquiring solar power developer REC Group from China National Chemical Corporation (ChemChina) at a price between USD1bn and USD1.2bn, as reported by Economic Times on August 31. REC specializes in photovoltaic (PV) silicon materials, multi-crystalline wafers, as well as PV cells and modules for rooftop commercial and industrial facilities, having an annual production capacity of 1.5 gigawatts (GW). Through acquiring REC, RIL would obtain cutting-edge technology and manufacturing capabilities for its expansion plan in the solar power sector. To fund the transaction, RIL is planning to raise USD500m to USD600m from global banks while making up for the rest through equity financing.
Formed in 1996, REC registered in Singapore with its headquarters in Norway and was bought by state-owned ChemChina for USD640m in May 2015. As the largest solar panel producer in Europe, REC owns production facilities in both Norway and Singapore and has an accumulated output of more than 40m solar panels, equivalent to 11GW of installed power generation. Including REC, Chinese companies have occupied the most shares of the global solar energy market. According to the sales statistics of PV modules in 2020, eight out of the top ten companies were Chinese firms, except for South Korea’s Hanwha Q Cell and US maker First Solar [FSLR:US]. The ten companies’ combined shipments reached 117GW, accounted for 84% of new installations globally, while LONGi Solar [601012:CH] and the other seven Chinese producers contributed over 100GW.
Facing the dominant position of Chinese solar power companies, RIL also intended to reduce the dependence on Chinese makers by acquiring REC. REC claimed that its HJT technology panels have an efficiency of 25%, higher than normal products at 15% to 18%, while those were the main products of the company marketing in India recently. Currently, India’s annual production capacities of PV cells and modules are respectively 3GW and 15GW, far away from the country’s target of 280GW of installed solar power in 2030. RIL released its green energy plans this June, including the launch of 100GW of solar power by 2030. The firm aimed to invest USD10bn in building four large-scale factories for manufacturing solar PV products, energy storage batteries, green hydrogen, and fuel cells, integrated as the Dhirubhai Ambani Green Energy Giga Complex in Jamnagar.