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RIL's foray into renewables-III: Scale is important
Jul 25: For a company like RIL, scale will be of paramount importance while going into renewables.
8Most renewables projects are much smaller than typical oil and gas projects. Renewables project investment ranges from US$660 million for a base-case solar project (details of which are carried here) to US$2.3 billion for offshore wind.
8This ranks alongside small to medium-sized pre-FID upstream developments in the portfolio of oil majors, even assuming a 100% working interest basis.
8Offshore wind is the best current route to scale up for now. And India provides a big opportunity in this segment.
8Its potentially ranks alongside some of  Big Oil's s largest next generation upstream developments.
8A 2.4 GW initial wind energy development would require US$7 billion of investment, generating an IRR of 11% and stable cash flow of US$0.9 billion a year.  RIL and BP can join hands for such a project.
8Recent offshore projects awarded in Germany have been bid into auction at zero subsidy. This implies that operators expect another step-change in cost reduction post 2020, allowing next-generation projects to achieve similar returns and cash flow profiles for much lower prices.
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