Why has Reliance acquired Faradion and what is the company into?

On Friday, Reliance Industries issued a press release that it had bought 100% stake in Faradion Ltd of the UK. This is part of their aggressive green energy plans. It may be recollected that RIL has promised to invest $10 billion in the next 3 years in green energy. The stake in Faradion based in Sheffield in UK, was purchased at an enterprise valuation of GBP100 million which approximately translates into Rs.1,000 crore.

Faradion owns the patented sodium-ion battery technology, which is a much finer and greener improvement on the traditional lead acid battery. In addition, Sodium is the sixth most commonly found element on earth, so there is no question of sustainability. This is unlike the batteries based on cobalt and nickel, which are not replenishable. Reliance New Energy gets access to High Density, sustainable battery technology at low cost.

What is in it for both the parties. Reliance gets the access to a unique and sophisticated technology for batteries that is also green and sustainable. On the other hand, Faradion gets a much larger balance sheet that will help the company to accelerate the commercial roll out of its technology. In addition, Reliance New Energy will also infuse Rs.250 crore into Faradion.

For Reliance, the Faradion deal is like hitting many birds with one stock. For starters, sodium is not a rare minerals like cobalt, lithium or graphite. Sodium batteries are considered relatively much safer for transport and storage. More importantly, cost of ownership is as low as traditional batteries. Sodium batteries operate effectively in extreme temperatures ranging between -30 degrees and 60 degrees, making it fit for most conditions.