Reliance buys Norway's REC Solar Holdings from China's Bluestar for $771 mn

Mukesh Ambani-controlled Reliance New Energy Solar, a wholly owned subsidiary of Reliance Industries (RIL), has acquired REC Solar Holdings (REC Group) from China National Bluestar (Group) Co. An RIL statement said the transaction is for an enterprise value of $771 million.

This is the first major renewable energy deal, where an equipment manufacturing facility has been acquired.

In other recent deals, such as the ones between Adani and SB Energy Corp., or the ORIX-Greenko and GPSC-Avaada share acquisitions, renewable energy projects or companies that have installed power generation capacity were involved.

Another significant deal for the renewable energy sector was the merger of ReNew Power with RMG II, a blank-check company, but that was for the purpose of ReNew's Nasdaq listing and did not lead to any capacity addition. 

The RIL-REC deal is in line with what Ambani had said at his company’s 44th annual general meeting. Commenting on the new energy and new materials business, he had said, “As a company always focused on growing businesses of the future, RIL will provide leadership on the combined strength of its balance sheet, talent, technology (tech), and proven project-execution capabilities. RIL will make its new energy business truly global.”

While REC Group is based out of Norway, it was controlled by the Chinese government-owned China National Chemical Corporation (ChemChina) that holds 79.5 per cent stake in China National Bluestar (Group) Co.

Bluestar had acquired REC Solar in 2014 for $640 million.

“REC is headquartered in Norway and has its operational headquarters (HQs) in Singapore and regional hubs in North America, Europe, Australia, and the Asia Pacific. The 25-year-old company has three manufacturing facilities – two in Norway for making solar-grade raw polycrystalline silicon, commonly referred to as polysilicon, another in Singapore making photovoltaic (PV) cells and modules,” said the RIL statement.

Back in 2014, REC Group was facing high costs and price competition from other Chinese solar equipment manufacturers. The decision to shift operational HQs and manufacturing facilities out of Norway was an attempt at lowering costs.

According to a report by Jefferies India, REC is the only company globally that has commercialised tech, which consumes 75 per cent less power than Chinese competitors. “REC has implemented the fluidised bed reactor (FBR) tech for producing polysilicon on a commercial scale. The FBR process consumes 75-80 per cent less energy than the traditional Siemens process that Chinese players use,” said the report.

According to RIL, REC has over 600 utility and design patents, of which 446 are granted; the rest under evaluation.

In January, China’s patent office upheld the validity of REC’s split cell and junction box tech patent. According to REC, this in-house developed tech is a key feature of REC Group’s advanced solar panels. REC Group had raised the dispute to protect its intellectual property through a patent infringement lawsuit against South Korea-based Hanwha Q Cells in February 2020.

In May this year, REC announced the launch of its TwinPeak 4 Series, the fourth-generation of its premium solar panels for residential and commercial rooftop installations.

REC can currently produce 1.8 gigawatt (Gw) of solar panels annually. It has around 10 Gw of installed solar power generation capacity the world over.

“RIL will strongly support REC’s planned expansions, including 2-3-Gw cells and module capacity in Singapore, brand-new 2-Gw cells and module unit in France, and another 1-Gw module plant in the US,” said the RIL statement.

“In India, RIL plans to use this industry-leading tech into its fully-integrated, metallic silicon-to-PV panel manufacturing gigafactory at Dhirubhai Ambani Green Energy Giga Complex, Jamnagar, initially, starting with 4-Gw per annum capacity and eventually growing to 10 Gw per annum,” added the statement.

Commenting on the acquisition, RIL chairman said, “It (the acquisition) is in line with our strategy of investing in new and advanced tech and operating capabilities aimed at achieving RIL’s goal of enabling 100 Gw of clean and green energy before the end of this decade.”

“Together with our other recent investments, RIL is now ready to set up a global-scale integrated PV gigafactory and make India a manufacturing hub for lowest-cost and highest-efficiency solar panels,” he added.