In 2014, heavy machinery manufacturer Schwing Stetter put up a rooftop solar power system at its factory near Chennai in southern India. Operating out of a city that experiences frequent power outages, the company wanted to explore other sources of electricity and zeroed in on a 100 kilowatt (KW) rooftop solar system. The payback time then was seven years. Today, it is only five years.
Another Chennai firm, water pumps manufacturer Grundfos Pumps, put up a 52 KW rooftop solar system in 2014 and followed it up with another 98 KW. The company now gets around 26% of its power requirements from solar sources.
Till a few months ago, Schwing Stetter and Grundfos were among a handful of firms experimenting with renewable energy. Today, with solar and wind energy tariffs crashing below even grid power and the government pushing for them, companies are going big on renewables. Some are even working towards meeting all their needs with clean power.
Last couple of years has seen mainstreaming of solar for large companies. In fact, such is the demand that the corporate solar market in India could touch around 10,000 megawatts (MW) by 2023, according to a report by the World Business Council for Sustainable Development (WBCSD), a global advocacy association of some 200 firms dealing with business and sustainable development. The rooftop segment, tottering along till now, could make up for 40% of the additions.
Besides rooftop solar, companies typically get their renewable power from on- or off-site solar plants and wind projects. These assets could be either owned by the company or by a clean-power provider.
The driving forces
The movement has picked up steam due to multiple factors.
One, renewable power is now much cheaper than before—around Rs4.5 per unit, including regulatory costs, compared to an average Rs 6 for power bought from the state’s grid. Installation costs, too, have fallen from around Rs60,000 per KW in 2014 to around Rs48,000.
Five years ago, Companies looking for rooftop solar were the ones who really wre looking at sustainability aspect. Today, the savings by themselves are substantial enough. Now it makes more business sense. By just buying solar power we not only impact the environment positively, we also save money as the unit cost comes down. This will not just explore 100% renewable but would like to be net positive in emissions right across our supply chain
Solar power ecosystem in India is developing rapidly and it has helped firms that aren’t aware of its nuts and bolts to take the plunge much easier. Awareness among companies has really increased a lot. That has kind of a cascading effect. They don’t have to spend a year going through the process of evaluating risks and vendors and so on. The decision-making cycle, sales cycle has reduced substantially.
Besides, the sustainability bug has bit Indian firms.
In step with global trends, they are turning green and sustainable, with some like Infosys, automaker Tata Motors, and dairy company Hatsun Agro even making RE100 commitments—pledging to source all their power requirements from renewables. This April, in response to Apple’s announcement about being powered entirely by renewables, the CEO of digital payments firm Paytm tweeted saying “Going to do this @Paytm.”
Such ambitious statements from the top make a difference in getting the projects.
The impediments
While the interest, economics, and resources are in place, regulatory hurdles and a lack of government support could still stall this newfound momentum.
For one, the policies of most Indian states are unclear when it comes to corporate use of renewable energy. An important element of rooftop solar power is net metering, a mechanism that lets users sell surplus power generated to the state electricity utility. And most Indian states don’t have net metering policies.The company can’t even provide free power to those who could use it, he added, due to the lack of rules.
As industrial users increasingly take to renewables, the already financially-stressed government-run power distribution firms lose a large chunk of high-paying customers. So, states have no incentive to promote green energy. For instance, companies that choose to buy power from private firms have to pay a host of regulatory charges called “open access charges” which include levies for using the state grid or a cross-subsidy charge to subsidise agricultural and residential buyers.
Nevertheless, corporate India’s shift towards sustainable power consumption is here to stay.
