 "Pratik Agarwal")
Heavy industries are inherently carbon-intensive. Be it the production of steel from iron or cement from limestone, every process involves the burning of fossil fuels, which translates into damaging carbon emissions. Cutting all these emissions from industries that power the gross domestic product (GDP) of nations, is no cakewalk. Till recently, solutions for this were seen as technically unfeasible or slow and absurdly expensive. But today, both economics and technological advancements favour industries. Decarbonising India's industrial juggernauts is not a distant dream anymore.
The Opportunity in C&I segment
India's commercial & industrial (C&I) segment accounts for a staggering 70 gigawatt of the country's total power consumption. To give you a sense of scale, this power demand is close to Germany's peak demand.
While the C&I sector's intent and commitment to go carbon-neutral is at an all-time high, a significant impediment to the widespread adoption of green power by C&I customers is the prevailing lack of awareness. Astonishingly, many businesses are oblivious to the possibility of procuring round-the-clock renewable energy (RTC-RE) from the grid and find themselves dependent on off-grid polluting (diesel/thermal) captive generation capacity or beholden to the government-owned distribution companies (discoms). In some States, policy uncertainty and lack of financing also become a hurdle for well-intentioned C&I players wanting to decarbonise.
Taken together, these constraints resulted in a paradoxical situation. Businesses, which form the backbone of the Indian economy, are grappling with subpar service quality or struggling with high power costs. These circumstances in the past were impeding India's ability to compete effectively in sectors such as manufacturing and data centres at the global scale. That said, a lot has changed and continues to change.
Untapped opportunities
The C&I segment in India is expected to undergo a massive upheaval, much like what the telecom sector experienced 25 years ago. In the 1990s, the Indian government implemented crucial reforms that revolutionised the telecom industry. The industry reaped immense rewards by encouraging private investment. India witnessed unprecedented growth in mobile connectivity and telecommunications services and today boasts an impressive 1.14 billion wireless subscribers.
When it comes to addressing the needs of C&I customers, contrary to the perception of an overcrowded market, the power sector in India remains significantly underpenetrated. Industrial customers, burdened by the pain of sub-par service quality and soaring costs, are yearning for predictable, round-the-clock green power at competitive prices. It is this longing for change that is expected to drive the industry forward and ultimately produce a hockey stick effect. In doing so, India can seize a monumental opportunity to foster growth and bolster the competitiveness of C&I players.
Spurring RTC growth
In an era where global consciousness favours clean energy and environmental sustainability, the C&I segment requires access to predictable RTC-RE at a reasonable cost.
Across the Mediterranean, we have seen Europe emerge as a champion of market liberalisation, with 93 per cent of demand operating under full wholesale market competition and 85 per cent enjoying full retail competition. Globally, these numbers reflect the European power market's incredible diversity of options and competitive dynamics. This also means that just like some of the other essential services, including auto fuels and telecom services, consumers in Europe can choose their electricity supplier.
Closer home in India, the introduction of Open Access (OA) market – a non-discriminatory access to transmission and distribution infrastructure for any power consumer or generator, has greatly benefitted the C&I segment, which was earlier dependent on discoms for procuring power. In the past decade, the rise of renewable energy has also helped the OA market to grow significantly. From around 300 MW in 2009, the size of the renewable energy OA market grew to ~10 GW as of FY 2022. The central government's Green Open Access Policy in 2022 was a significant positive regulatory development for the renewable energy OA market. After that, multiple states – including Haryana, Karnataka, Punjab, Rajasthan, Telangana, amongst others, have adopted the provisions of this policy. In addition, reforms like waiver of transmission charges and mandatory open access promoted the adoption of renewable energy in India. Together, these reforms represented a forward march towards making electricity an open market, aligned with the original intent of the Electricity Act 2003.
However, the C&I segment's primary need for RTC-RE needs an even greater thrust. Measures in the form of an extension of the transmission charges waiver timeline for RTC-RE could be introduced to incentivise the customer base. And why just this waiver; energy output from energy storage projects (batteries or pumped hydro) should also be given a waiver of open access charges. This will go a long way in reducing the landed cost of power for C&I, providing a fillip to the segment to adopt RTC-RE.
A few years ago, I met John Kerry, the US Special Presidential Envoy for Climate Change, during his visit to India. I often quote this line from my conversation with him, where he asserted, "We need all hands on deck—governments can't do it alone." For companies with trillions of dollars at stake, decarbonisation has become a bottom-line imperative. And when the stakes are high, the rewards are even greater. From tapping into regulatory incentives, enjoying positive consumer perception, and attracting the best and brightest talent to seizing new market opportunities, the road to decarbonisation might not be the bed of roses that you imagined, but not strewn with thorns either.
The writer is director, Serentica Renewables, a decarbonisation platform. Views expressed are his own
The writer is director, Serentica Renewables, a decarbonisation platform. Views expressed are his own
