Sodium-Ion batteries enter the Indian Markets | Reliance-Faradion Limited Deal Detailed Analysis3 min read
On 31st December 2021, Reliance Industries announced the acquisition of Faradion Limited via its subsidiary Reliance New Energy Solar Limited (RNESL). With this acquisition, Sodium-Ion batteries enter the Indian market. The Sodium-Ion batteries are expected to benefit 2 sectors i.e., Energy Storage and Electric Mobility. So, let’s discuss more this acquisition and the prospects of Sodium-Ion batteries.
Acquisition of Faradion by Reliance:
- Reliance New Energy Solar Ltd (RNSEL), a wholly-owned subsidiary of Reliance Industries will acquire a 100% stake in Faradion.
- The deal would be done for an enterprise value of 100 million pounds (Rs. 1000 crores).
- Reliance would also be investing a further 25 million pounds (Rs. 251 crores) for “growth capital, commercial rollout and balance for repayment of debt and other fees” as stated by the company in its filing for the exchange.
- The investment is also a part of the plan of Mr. Mukesh Ambani’s to invest Rs. 75,000 crores in next three years in new clean energy business making RIL net carbon neutral till 2035.
Steps involved in the deal:
- RNSEL will acquire 100% shareholding for 94.42 million pounds (Rs. 944.2 crores).
- The company will acquire 88.92% of equity shares of Faradion for 83.97 million pounds (~ Rs. 843 crores)
- 11.08% will be acquired in three years for 10.45 million pounds (~ Rs. 105 crores).
- The company will also subscribe to new equity shares from Faradion.
- The total additional investment would be 31.59 million pounds (~ Rs. 317 crores).
- Of which the Faradion will use 25 million pounds (~ Rs. 251 crores) as growth capital, repayment of the debt, and other fees.
About Faradion Limited:
- Faradion is a private limited company that was incorporated on the 6th of August, 2010 in the UK. It is based in Sheffield and Oxford in the UK.
- The company has a patent for its sodium-ion battery technology. This makes it the leader in its technology and one of the leading global players in battery technology companies.
- It provides high performance, low cost, sustainable & safe energy.
- The company has superior, strategic, extensive IP portfolios covering various aspects of sodium-ion technology.
- The applications delivered by this technology are cost-effective, leading-edge in a broad range of sectors like energy storage, backup power & energy in remote locations, and mobility.
- Reliance Industries has stated that the technology is low cost, sustainable, scalable, and has a high density at par with lithium-ion with patents in zero-volt safe transport and storage.
Difference between Sodium-ion and Lithium-ion:
- Sodium-ion has a lower energy density compared to lithium-ion, but they work better in cooler temperatures and also have a better life span. This makes them a good long-term investment.
- Challenges with lithium-ion batteries are again generating new developments in sodium-ion batteries on which research began in the 1970s but was stopped due to no takers.
- Lithium-ion batteries are currently facing challenges like cost, safety, and availability of materials.
- The materials which are needed for sodium-ion batteries are available widely. Earth reserves have a 2.5%-3% content of sodium which is 300 times more than lithium.
- This gives sodium-ion a major cost advantage which can make its battery pack 30%-50% cheaper. It would be cheaper than the cheapest EV battery option available.
- Sodium prices are also less volatile than the lithium counterpart.
- Sodium-ion batteries are lightweight and non-flammable. The risk of battery catching fire is low. Risk during transit is also low.
Plans of Reliance Limited:
- Reliance Industries will be using the technology of Faradion at its fully integrated energy storage Giga factory which the company has proposed to establish.
- This is a part of the company’s Dhirubhai Ambani Green Energy Giga Complex project at Jamnagar, India.
- This will strengthen the company’s ambition of creating an advanced and integrated new energy eco-system.
- Mr. Mukesh Ambani said in a statement that the company will use sodium which can secure India’s energy storage requirements which the country needs for its large renewable energy and fast-growing EV charging market.
- Mr. Ambani said that Reliance Industries will work with Faradion management and accelerate the former’s plans to commercialize the technology by building integrated and end-to-end Giga scale manufacturing in India.
What Should Shareholders Do?
Sodium-Ion batteries which are considered to be a great alternative can be very beneficial to the Energy Storage and Electric Mobility Sector with the emerging market of Electric Vehicles (EVs), the concept of clean energy & green energy, and other environmental friendly concepts. Hence, one should closely watch the developments in this space and then should select the players in this industry to keep on their radar.