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The C&I market for renewables will explode over the next decade

The C&I market for renewables will explode over the next decade

The C&I market for renewables will explode over the next decade

Decarbonisation efforts have taken centre stage in India since our Hon’ble Prime Minister announced India’s Net Zero goals by 2070. India’s leadership of the International Solar Alliance has also brought considerable focus on solar energy. All this has resulted in a significant addition of Renewable Energy (RE) capacity in India in the last few years. Despite being behind in capacity addition compared to the publicly stated numbers, adding 65 GW in the last 7 years is no mean feat. However, as far as solar energy is concerned, the majority of the capacity addition has been in the utility-scale segment – large plants that supply green energy directly to the grid. 

In June, the Ministry of Power (MoP), Government of India (GoI) notified the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022. Let me begin by stating an oft-overlooked fact – Commercial and Industrial (C&I) customers consume close to 50% of the power produced in India, thereby being the single largest segment. 

Growth in demand for Renewable Energy: 

There are primarily three reasons driving the demand for renewable energy in the C&I segment.

  1. Globally, organisations have become very particular about the environmental impact of their operations and have mandated the incorporation of sustainable processes across their value chain. Indian corporations have also followed suit. Even smaller units which cater to global supply chains are opting for green energy to comply with the requirements of their customers. Additionally, even investors are looking for environmentally responsible investments. 
  2. In the last decade, renewable energy tariffs have fallen ~80%, making it a clear winner in terms of cost of electricity. Many companies, especially those that are energy intensive, opt for renewable energy as it helps them save up to 50% on their electricity bill. Furthermore, the sector also seen advancement both in terms of technology and business models. Battery storage is gradually becoming more affordable whereas novel markets like VPPs and IRECs are providing buyers multiple markets to procure power.
  3. India is among the fastest-growing major economies in the world. Recently released data from the World Bank shows that the Indian economy is projected to grow at 6.5% in the current fiscal year (FY22-23). This high economic growth trend is likely to be maintained and will significantly increase the already high power demand. According to the Central Electricity Authority (CEA), India’s power demand will touch 1,874 billion units during the year ending March 2027, compared to 1,320 billion units in 2021/22 – an average increase of 7.2 per cent over five years ending March 2027. As India aims to increase its non-fossil fuel based power capacity to 50% of total capacity by 2030, more RE capacity will get added.

Green Access Rules are a shot in the arm for open access 

The government’s focus until recently, was on quickly adding capacity by promoting utility-scale renewable energy. However, other segments such as rooftop solar did not take off as planned. This lop-sided growth has resulted in the country falling significantly short of the original 40GW rooftop solar energy capacity installation target by 2022.  

To bridge the gap, the Ministry of Power announced the Green Energy Open Access rules earlier this year. One of the pivotal provisions of these rules is the reduced green energy Open Access Transactions limit from 1 MW to 100 KW for all consumers. Earlier, the open access market was out of bounds for several small consumers, especially MSMEs. This change will allow thousands of small and medium enterprises to switch to open access routes to procure low-cost renewable energy voluntarily at much cheaper rates. Therefore, this one provision will increase the open access market multi-fold. 


Read full story at The Times of India