Sealing green power for homes and firms

Indian companies are expanding their clean energy consumption, but tardy progress in rooftop solar is a missed opportunity

Corporations across the world are driving renewable energy installations as they look for cost-competitive power while aspiring to meet their green targets. US firms take the lead for two reasons. “The US has the companies that are most willing to buy renewable power and a market structure that best enables purchases,” said Kyle Harrison, BloombergNEF’s head of sustainability research.

Technology giants Amazon, Facebook-owner Meta, Microsoft and Google are the world’s top buyers of clean power. The most recent power purchase deal signed by Amazon to buy power from an Iberdrola plant last month has pushed its clean energy portfolio beyond 25 gigawatts. For scale, that is far more than Tata Power’s generation capacity of 14 gigawatts but much less than NTPC’s 72 gigawatts.

Clean power deals signed by corporations globally totalled almost 37 gigawatts in 2022 — up 18 per cent over the last year, and a new record — according to BNEF. The Americas accounted for two-thirds of that volume.

Indian companies are also expanding clean energy consumption, driven partly by economics — green power is typically priced lower than the high commercial and industrial tariffs they pay — and partly by their sustainability agendas. The highest volume of corporate procurement deals was signed in the country in 2022, totaling 3.4 gigawatts, according to BNEF data. A good chunk of these were wind-solar-hybrid projects.

Corporations also have the option to procure their green power through their utilities. BNEF tracks 11 states in India that are now offering this option on payment of a premium that ranges from 7-26 per cent.

Big opportunity: The scope for expanding clean energy purchases by corporations is huge. While the federal government has been making it easier for firms to buy clean power, removing some surcharges and other procedural irritants, there is a lot more that can be done to tap into the latent appetite of corporate India, as it embarks on its net-zero journey. Wipro, for instance, aims for net-zero greenhouse gas emissions by 2040, with interim targets for 100 per cent renewable energy and electric mobility by 2030. That would mean doubling renewable energy procurement to 150 million units by 2030. Tata Consultancy Services has more than doubled the share of renewable energy in its total consumption in one year, from 16 per cent in 2020-21 to 37 per cent last year.

Meanwhile, clean power developers are devising strategies to expand their presence in the market. Renew, for instance, has a “separate department which exclusively looks at clean energy solutions for corporate customers.” In a presentation to investors in September last year, the company said that it expects more than 25 per cent of future portfolio growth to come from corporate power-purchase agreements that offer higher returns than plain vanilla utility scale projects.

Corporate power users are the most valued customers — paying the highest tariffs and consuming significant volume. Most state distribution companies are in a financially precarious position, and tend to raise the bar for a corporation trying to source power from anywhere else, says BNEF India analyst Komal Kareer. It is after all revenue leakage for them.

Monetising rooftops: Rooftop solar presents another great opportunity to scale up renewable energy installations. Millions of Indian rooftops that could host solar panels and generate thousands of megawatts of power are not doing that because of multiple hurdles. Against a target of 40 gigawatts of rooftop solar by December 2022, actual installations are about a fifth of that, at about 8 gigawatts.

Offering capital incentives for installing small-scale rooftop solar has been a way to put money in the pockets of the wider population. The national portal set up last year (www.solarrooftop.gov.in) has made it easier for residential customers to install solar on their roofs, and made it a little harder for utilities to deny them permissions to do so. Interestingly, Gujarat accounts for the bulk of active residential solar plants so far.

In terms of scale, China topped the rest of the world, adding more than 51 gigawatts of small-scale solar power last year. That was more than the combined renewable energy capacity added by countries like the US, India and Brazil. That has triggered its own set of problems as the absorption capacity of the grid in certain areas is limited, and storage is not a part of all these plants.

India does not need to be worried about runaway growth yet, but tardy progress is a missed opportunity. There is all this sunlight that could be used to power a house, a shed, a factory, an office or a bus station, available for more than 300 days every year in most parts of the country.

The trajectory for large utility-scale projects in the country is much more encouraging, with the government announcing its intention to invite bids for 50 gigawatts of renewable energy capacity every year for the next five years.

The writer is New York-based senior editor – global policy for BloombergNEF, vgombar@bloomberg.net