Reliance Industries, a fossil fuel giant, is moving into renewables, with company chairman Mukesh Ambani announcing a Rs 75,000 crore investment plan on June 24. India’s solar industry, through Reliance, is making a huge bet on competing with China, while the Indian firm’s move into the sector could even signal the end of the oil era.

In India, industry experts believe that Reliance’s announcement has firmly pushed the renewable sector into the spotlight. “It is very encouraging to see how big corporates in India are making commitments and channelling investment into the clean energy space,” said Vibhuti Garg, energy economist at the US-based Institute for Energy Economics and Financial Analysis. Garg further suggested that Reliance’s announcement will also encourage other companies to invest in the sector, and take the new energy route seriously.

Reliance’s renewables announcement sent shockwaves through the energy industry, just like the company’s aggressive move into mobile internet with its Jio platform and devices in 2016. Jio now dominates the market, and now has ambitious 5G plans. Reliance is hoping that its renewables strategy will lead to similar dominance.

Jio-like success?

“The company’s vision with launching the new energy business was to aim to bridge the green energy divide in India and globally, similar to bridging the digital divide in India in 2016 [with the launch of its telecom business Reliance Jio],” said lawyer Sonam Chandwani, managing partner at KS Legal & Associates.

In 2016, with the launch of Reliance Jio, the telecom arm of RIL’s subsidiary Jio Platforms, Ambani changed the dynamics of India’s telecoms sector. Within a year of its launch, due to its ultra-affordable data prices, India reportedly became the top mobile data consumer across the world.

Following Reliance’s entry into the sector, the average data consumption by an Indian user rose to 11 gigabytes of data per month. That success came at a cost – the cut-throat competition that Reliance triggered in India’s telecom industry.

Thanks to its cheap data prices and a lot of freebies, in just five years of being in business, Reliance Jio boasted of widening its mobile subscriber base to 41.49 crore in February, with the addition of new 42 lakh users in just one month. In the same time span, its rivals Bharti Airtel and Vodafone Idea added 37 lakh users and 6,50,000 users respectively.

New energy bet

This is Ambani’s three-step plan to replicate Jio’s success with renewables:

  • Hyper-Integration: By integrating scientific knowledge with technological innovation to build and operate integrated systems.
  • Robust business model: By building a model that catches the irreversible upward curve in the demand for green energy in India and globally, and the downward curve in the cost of its production.
  • Scaling capacity: By improving the efficiency, performance and life-cycle of assets and operations to achieve total system optimisation and economics.

Meanwhile, Ambani’s Reliance is not the first company in India to shift its focus to the green and renewable energy sector in a country that’s still heavily dependent upon coal. In 2019, from April to December, private companies invested around Rs 37,000 crore in renewable energy.

On June 22, state-owned NTPC, India’s largest energy conglomerate, announced that it will double its renewable energy capacity to 60 GW.

Similarly, in March, Adani Green Energy signed a contract to acquire a 100% stake in SkyPower Global’s 50 MW solar power project in Telangana. This deal will increase its operational renewable capacity to 3,395 MW and the total renewable portfolio to 14,865 MW. In the same month, India and the United States restructured their strategic energy partnership to concentrate on cleaner energy sectors including biofuels and hydrogen production.

“Companies that are still betting big on fossil fuels have seen shareholder value erosion, and so increasingly, there is pressure from the boardroom to invest sustainably,” Garg of Institute for Energy Economics and Financial Analysis explained.

India’s renewable sector

India’s nascent renewable sector is full of opportunities and is constantly growing. With an installed renewable energy capacity of 94.43 GW (as of February), it has attracted investment worth $42 billion since 2014, according to the Indian Brand Equity Foundation, the state-owned export promotion agency.

According to the Indian Brand Equity Foundation, India could see investments of around $500 billion in its new energy industry by 2028. By 2040, the Indian Brand Equity Foundation also says, around 49% of the total electricity in India will be generated by renewable energy, with more efficient batteries used to store power, which will, in turn, cut solar energy costs by 66%.

However, if that happens, the use of renewables in place of coal will save India Rs 54,000 crore annually.

Meanwhile, despite the $10 billion investment announcement, industry experts believe that Reliance could do better.

“Given RIL’s past investments in the petrochemicals and telecom sectors, the scale of this announcement is relatively small,” says Ashish Fernandes, CEO at Climate Risk Horizons, a Bengaluru-based climate research group. “However, it is an indicator that big business is starting to understand that the era of fossil fuel power expansion is ending much faster than expected.”

Emphasising the need to take green energy more seriously, Fernandes warned investors in the coal and oil and gas sector against any new fossil fuel investments.

“These are outdated legacy investment plans that need to be re-examined in light of the rapid changes in energy economics,” he added. “Continuing to push fossil fuel investments that are destined to be stranded will have serious negative repercussions on the Indian economy.”

This article first appeared on Quartz.