Policy Uniformity Key to Meeting Net-Zero Goals: SKF Interview

SKF recommends relaxing renewable energy banking rules

October 9, 2023


Commercial and Industrial (C&I) entities are actively seeking clean, environmentally friendly, and cost-effective energy sources. These businesses are focused on reducing operational expenses and gaining environmental benefits by transitioning to renewables.

In this exclusive interview with Mercom India, Ranjan Kumar, Director – Ethics, Legal, Sustainability and Corporate Affairs, SKF India and Southeast Asia, talks about the company’s net-zero strategy and green energy initiatives. He speaks about the company’s motivation to switch to renewables to meet its energy demands and how uniform power sourcing and generation policies across the country could drive renewable adoption among corporates.

SKF India is a leading automotive and industrial engineered solutions company that has evolved over the years into a knowledge-driven engineering company.

Here are some excerpts from the interview:

Can you tell us a little bit about SKF India?

SKF started its operations in India in 1923, and 2023 marks the 100th anniversary milestone of SKF Group in India. Our solutions provide sustainable ways for companies across the automotive and industrial sectors to achieve breakthroughs in friction reduction, energy efficiency, and equipment longevity and reliability. We have a pan-India footprint comprising six manufacturing facilities, a nationwide supplier network, over 700 distributors, and an employee base of more than 1,600 dedicated professionals. With a strong focus on innovation and sustainability, we remain committed to creating a positive impact on society and the environment.

What are SKF India’s net-zero strategy and the roadmap to reach the net-zero targets?

By 2030, all our production facilities all over the world will have net zero greenhouse gas emissions, and by 2050, our entire supply chain, from materials to the delivery of our products and solutions, will be net zero. To reach these goals, we are committed to science-based target initiatives (SBTi) and RE100. Our targets are also aligned with the Paris Climate Agreement, which aims at restricting the global temperature rise to not more than 1.5°C. We are among the first industrial establishments to have been validated and approved by SBTi for both our near-term and long-term targets.

The 2030 goal of decarbonizing our operations will be achieved through energy and material efficiency improvements and by switching to renewable energy sources. We also aim to make at least a 31% reduction in the Scope 3 greenhouse gas emissions. To reach the 2050 net-zero emissions goal throughout the supply chain, we need to look at the upstream and downstream indirect emissions within scope 3. Included in Scope 3 downstream indirect emissions is the use of our sold products – an area where we know we can also help our customers reduce their direct emissions.

How much does renewable energy account for in SKF’s overall power consumption right now?

We have been working to source or generate an increasing share of energy from renewable sources for several years. The company has installed solar panels across multiple sites. This transition towards renewables has not only reduced SKF India’s reliance on fossil fuels but has also led to a substantial decrease in its carbon emissions.

Last year, SKF India sourced 41% of the energy required for our manufacturing through renewables, reducing the carbon footprint by over 20,000 tons. The manufacturing facility in Bangalore sourced 75% or 15 GWh of energy through existing solar projects, reducing carbon footprint by 10,700 tons.

The renewable energy journey for the manufacturing plant in Pune started with the installation of an 8.4 MW offsite solar project (Phase 1), which supplied 35% or 12.6 GWh of solar energy, reducing carbon footprint by 9,050 tons. Our Bangalore facility will be the first plant in India to be run on 100% renewable power, and the Pune factory will source 55-60% of the energy through renewables by next year.

When transitioning to green energy, have you opted for rooftop solar or solar open access/captive/group captive model?

This year, we signed a captive power purchase agreement for the SKF Bangalore factory for a wind-solar hybrid project. Through this agreement, the Bangalore factory will source 95- 100% renewable energy for manufacturing. Similarly, the Pune factory has entered into a captive solar power purchase agreement, increasing the share of renewable energy to 55-60% by this year. All these initiatives will help SKF to reduce scope 1 & 2 GHG emissions from 41% to 70% by the end of 2025.

What are SKF India’s plans for procuring renewable energy to reach the net zero target? What are your future needs in MWs?

SKF India has consistently worked on sourcing renewable energy since 2014 through various onsite and offsite solar and wind-solar hybrid projects. SKF Bangalore and Mysuru plants are close to achieving decarbonization targets in manufacturing. Considering our long-term needs, we still need approximately 25-30 MW of renewable energy capacity for other sites. SKF is working on additional wind and wind-solar hybrid power capex projects. To achieve net zero status by 2030, we are working on a virtual power purchase agreement (VPPA) solution to offset this requirement, ensuring additional benefits for SKF India.

In addition to energy cost savings, what drove SKF to adopt clean energy? What are some intangible benefits you have seen so far?

As a partner in nation-building, we consider it our responsibility to contribute towards addressing a few of the societal and environmental challenges present today. Globally, we have now revealed SKF’s purpose as ‘Together, we re-imagine rotation for a better tomorrow.’

The world is rapidly changing, and environmental and climate change mitigation are critical to the long-term survival of our planet. There is a growing demand for sustainable solutions across all industries. The shift towards sustainability has created a demand for environmentally friendly, energy-efficient, and socially responsible products and services. Clean technologies provide several intangible benefits, which may not be immediately apparent but can have significant long-term effects on the environment.

For instance, the adoption of clean technologies supports the transition to sustainable and green economies. This transition creates new job opportunities, enhances technological and innovation capacities, opens up new markets, attracts new businesses, and improves economic growth and development.

Besides renewable energy, what are SKF’s other sustainability initiatives?

At SKF India, we want to integrate sustainability into our business –our products, services, and customer solutions. SKF India provides products, services, and solutions that help customers improve safety, reduce friction, improve process efficiency, reduce waste and use of material, extend service life, and achieve other sustainability benefits. We also contribute to the growth of the renewable energy industry and the electrification of vehicles.

Through our remanufacturing capabilities, we help customers refurbish end-of-life bearings, thereby reducing consumption, industrial waste, and total cost of ownership. Remanufacturing extends the service life of bearings. It reduces environmental impact, increases asset reliability, and cuts costs.

Additionally, our green manufacturing initiative focuses on reducing GHG emissions, conserving natural resources, and eliminating/reducing hazardous waste generation. For Instance, SKF India manufacturing sites are committed to water conservation and ensure zero water discharge by treating the used water through effluent and sewage treatment plants for gardening and personal hygiene. SKF India sites have reduced their water consumption by 10% over the last year.

What policy prescriptions do you have for hastening energy transition?

SKF India has manufacturing plants across Maharashtra, Gujarat, Karnataka, and Uttarakhand. All these states have different regulations for sourcing or generating renewable energy (solar and wind energy). As renewable energy generation is affected by environmental conditions such as wind speed and solar irradiation, the generation is intermittent.  To achieve the GHG emission objectives by 2030, SKF recommends the following policy changes:

  • All states must have uniform renewable energy sourcing and generation policies aligned with the central government.
  • As renewable energy generation and consumption patterns may differ in quantity and time slots, renewable energy banking rules must be relaxed and banking charges rationalized.
  • Most state DISCOMs have restricted renewable energy generation and sourcing capacities with the contracted demand. The plant load factor (PLF) of renewable projects ranges between 18% and 35%, whereas fossil fuel generators have almost 100% PLF. Most organizations find difficulty in sourcing/generating renewables required to achieve net zero status. Contract demand restrictions should be removed to avail the required capacity of renewables.
  • Central and State electricity grids must have enough capacity for the grid to accommodate 95% of renewables.

What is your advice for companies like yours that are mulling renewable energy adoption?

First and foremost, conduct a comprehensive energy audit to gain a clear understanding of your current energy consumption patterns. This will help you identify areas where energy efficiency improvements can be made, often serving as a cost-effective starting point.

Set clear goals for renewable energy adoption. Determine whether you want to offset a certain percentage of your energy consumption with renewables or if you have specific capacity targets in mind.

Prioritize energy efficiency measures before diving into renewable energy projects. These efficiency improvements can substantially reduce your overall energy consumption, making renewable energy projects more financially viable.

Explore different renewable energy sources such as solar, wind, biomass, and hydropower. Evaluate which option aligns best with your location, energy needs, and budget constraints.

Conduct a thorough financial analysis to assess the economic feasibility of renewable energy projects. Consider factors such as upfront costs, available incentives, and long-term savings.

Seek guidance from renewable energy experts, consultants, and relevant government agencies. They can provide valuable insights on project development, financing options, and navigating the regulatory landscape. Make sustainability a core value of your company. Communicate your commitment to renewable energy adoption to your stakeholders, customers, and employees. It can serve as a powerful driver for change.