Conducive Policies Key for Corporates to Adopt Renewable Energy in India: Interview

Over 180 major businesses in India procured a fourth of their electricity from renewables in 2022

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Substantial savings on energy bills and the clean energy transition goals have led to a growing number of commercial and industrial (C&I) entities in India adopting renewable energy sources for their electricity needs.

Several large companies have signed up to RE100, a global corporate renewable energy initiative bringing together hundreds of businesses committed to 100% renewable electricity. In India, the RE100 program is driven by the Climate Group.

In this exclusive interview with Mercom India, Divya Sharma, India Executive Director of Climate Group, outlines Climate Group’s activities in India, including the progress achieved under the RE100 program and other decarbonization initiatives aimed at reducing emissions by industries in various sectors.

Here are excerpts from the interview:

Can you tell us about Climate Group’s initiatives in India? How many companies in India have joined the RE100 initiative anchored by Climate Group?

We’ve been in India for over 15 years, worked with 15 governments, and engaged with more than 190 businesses. We believe in the power of collective action. We’ve brought governments and companies together to drive climate action where emissions are highest. We’ve been running large initiatives on renewable energy procurement (RE100), energy productivity (EP100), decarbonization of the steel industry (SteelZero), and making electric vehicles the new norm (EV100 and EV100+ for medium to heavy-duty vehicles).

RE100 is among our largest initiatives in India. As part of the program, the businesses are committing to using 100% renewable electricity by 2050 at the very latest. Our goal is to accelerate the transition to zero-carbon grids. RE100 members represent diverse sectors, from cement to paper and automotive to IT services. Fourteen Indian-headquartered businesses are members.

Globally too, RE100 is the leading initiative for corporates looking to switch to renewables. With over 400 companies signed up, our members’ total electricity consumption is now greater than that of France. What’s remarkable for us is that by signing up for RE100 and EP100, the businesses are not only doing their bit towards climate change mitigation; they are sending a strong signal to governments and other businesses alike that the transition to renewable energy (RE) is possible, and that the transition is urgently needed.

How have Indian companies performed on the goal of increasing renewable energy sourcing to meet their electricity needs?

The progress in our EP100 and RE100 initiatives is important to share. We’re encouraging a comprehensive approach, urging businesses to procure renewable electricity and increase their energy productivity. We’ve recently released our annual disclosure report for RE100. More than 180 major Indian and global businesses in India reported procuring almost a quarter of their electricity from renewable energy in 2022. The total electricity demand of RE100 members stood at 17 TWh in 2022. Also, 48% of renewable electricity purchased by the members was from wind/solar projects. Hydropower was second at 39%.

Similarly, ten businesses are on track to double their energy productivity within 25 years of joining EP100. The cheapest energy is the one you don’t use, so energy efficiency can hugely impact a company’s bottom line.

It is heartening to see businesses committing and acting on these goals.

What are some of the reasons for companies to delay the adoption of renewable energy? How can this be overcome?

In the last decade, RE adoption in the C&I segment was triggered by strong fiscal benefits. With the gradual fall in solar and wind prices, subsidies have been curtailed for the C&I sector. The first preference of C&I consumers is to save on costs, and the benefits are low. An interplay of the right procurement option and innovation in RE technology is needed to support cost optimization for the consumer.

While the national government’s interventions like the Green Energy Open Access Rules, 2022, and recent Resource Adequacy guidelines have supported the creation of new market mechanisms and brought robustness to power markets, we also see policy and regulatory barriers persist in their implementation in states. We need to strengthen state-level regulatory planning.

The integration of storage infrastructure can help add reserves for peak load management. Banking can serve as a short-term alternative for intermittent RE but lacks a coherent framework today.

What actions are being taken by Indian companies in hard-to-abate sectors like cement and steel to decarbonize their operations?

We are seeing our members firmly set out on the path to decarbonization. For example, five top cement companies in the country have committed to RE100. Four have also committed to EP100. Under the SteelZero Initiative, we’re bringing onboard leading organizations to accelerate the transition to net-zero steel. We want to increase its demand. In India, the SteelZero initiative is also developing a Corporate Green Steel Procurement Framework (aligned to the Green Public Procurement Framework) to address policy barriers and develop the business and economic case for enhancing India’s scrap steel availability from ship recycling.

Is there enough awareness among Indian companies about the pressing need to decarbonize their operations by responsibly sourcing electricity? What is Climate Group’s strategy to get more Indian companies to commit to RE100?

We have seen a rise in interest among Indian companies wanting to join RE100. Backed by CDP’s accountability framework, it has built trust over the years. Regular forums have also offered opportunities for companies to share challenges and learn about achieving 100% RE. Companies are showing more confidence. RE100 is being seen as a serious commitment, even though uncertainties can dampen their interest. These uncertainties are mainly related to policy, regulations, new technologies (low or carbon-free), and financial aspects of round-the-clock RE. However, as I keep saying, we need more businesses to commit to 100% RE to curb climate change. India has the potential to lead the way in global sustainability in business, and companies can support the country’s commitments to net zero.

What recommendations can you offer to India’s policymakers and electricity regulators to create a more enabling environment for companies to switch to renewables and achieve the goals of a just transition?

We need to speed up policy change to factor in climate change. Policy is key. It will incentivize and guide market reform and can determine how fast or slow businesses adopt RE. Some Indian states still lack core state-level renewable energy policies, which will facilitate development if guided by waivers or incentives, especially in states with high renewable energy potential.

We see a just transition as an essential element of the switch to renewables and have started work on this piece. We are building a roadmap that can support businesses in their responsible RE journey. Policymaking can also contribute to adopting responsible renewable energy and making it people and environment-focused. For example, policies and laws that can lead to job creation in the RE sector. This is especially important to provide opportunities for workers from the conventional energy sector.

Climate Group is hosting the RE100 Conclave in collaboration with Mercom India on June 27-28, 2024, at Mahindra Towers in Mumbai. Large corporates keen on switching to 100% renewables and interested to know how can register by filling out the form before June 20th.

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