Business Today
Loading...

India becomes 2nd largest market on corporate renewable power

Indian corporates have been increasingly procuring renewable power through the open access route, mainly to meet decarbonisation targets and cost savings because of lower cost of renewable power vis-a-vis other sources

twitter-logo PB Jayakumar        Last Updated: January 6, 2020  | 18:34 IST
India becomes 2nd largest market on corporate renewable power
Representative Image

With Indian corporates increasingly adopting renewable power to run their offices and plants, the country has become the second largest growth market for corporate renewable power purchase agreements (PPAs) after the US. For the first half of 2019, India had a global share of 7.4 per cent with 440 megawatt (MW) installed, said a study named 'PPAs in India: Market & Policy Update' by the India Corporate Renewable PPA Forum.

Although India became the second largest growth market in 2018, with an addition of 1.6 gigawatt (GW) of capacity, the annual corporate PPA renewable addition in India in 2019 will be about 30-35 per cent lower than the installations in 2018, said the report. Between April 2018 and March 2019, of the 494 MW of capacity added through the corporate renewable PPAs under the open access route (a policy mechanism for heavy users with more than 1 MW load to buy cheap power from the open market), 158 MW was from solar projects and 336 MW from wind.

Companies in the Information Technology sector such as CISCO, Qualcomm, Adobe, Oracle and Mindtree, automotive companies such as Honda, SKF and Volvo, electrical companies such as GE,ABB, Honeywell and manufacturing companies such as ACC were in the forefront, purchasing renewable power in the range of 10MW to 30 MW.  

Indian corporates have been increasingly procuring renewable power through the open access route, mainly to meet decarbonisation targets and cost savings because of lower cost of renewable power vis-a-vis other sources. If corpoate PPAs were to the tune of 1110 MW as of March 31, 2017, it increased to 2910 MW as of March 31, 2019. With the growth of the open access market, large-sized independent power producers such as ReNew and Avaada, and other specialised project developers, such as CleanMax, Amplus and AMP Solar, have begun to considerably increase their market share both in utility and roof-top solar projects.  

The OPEX model (wherein the IPP invests and supplies power for a fixed period based on a pre-determined tariff) is a preferred choice for a lot of companies that do not want to invest in non-core operations. It's also convenient for them to manage these assets through a third-party player. Only a few cash-rich companies, such as ITC, PepsiCo and The Coca-Cola Company, are building these assets on the capex model, noted the report.

The report estimates that corporate renewable PPAs in India flourished in 2017-18 due to waivers on open access charges offered by states such as Karnataka, Andhra Pradesh and Telangana. As the window of opportunity to avail these waivers ended in these states, the extension of such waivers was equally unlikely in other states across India, though states such as Haryana and Uttar Pradesh have come up with attractive offers. For open access renewable plants commissioned before March 31, 2018, Karnataka had waived transmission, wheeling, banking and cross subsidy surcharge (CSS) charges for 10 years. The state government decided to discontinue these waivers for plants commissioned after 31 March 2018, despite several requests for extension.

In Rajasthan, the government had waived the CSS for all solar plants commissioned between April 2014 and March 2019. However, it did not extend the exemptions beyond March 31, 2019. In September 2019, Uttar Pradesh introduced its Captive and Renewable Energy Generating Plants Regulations, 2019, under which it gives 50 per cent exemption on wheeling and transmission charges for captive and third-party sale renewable projects. There is also a 100 per cent waiver on transmission for interstate sales and a 100 per cent exemption of state CSS for interstate sales of power for captive/third-party use.

To increase the adoption of corporate renewable PPAs in India, members of the World Business Council for Sustainable Development (WBCSD) formed the India Corporate Renewable PPA Forum in 2017 to exchange practical knowledge on the effective implementation of corporate renewable PPAs for both rooftop and utility-scale renewable energy installations in India.

Also Read: Delhi Police books Godhwani brothers in Rs 18.8 crore Religare fraud complaint by Malvinder Singh

Also Read: This stock from Rakesh Jhunjhunwala's portfolio defies market crash, rises nearly 3%

Also Read: US-Iran tension spooks Dalal Street; investors lose nearly Rs 3 lakh crore in market crash

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close