There is a growing global transition towards clean energy procurement, and corporate establishments are an integral part of this revolution. For companies, green energy procurement through on-site set-ups or corporate power purchase agreements or even renewable energy credits is an attractive proposition to meet their power require- ments in a sustainable and cost-effective way.
In India, commercial and industrial tariffs are much higher than residential tariffs due to cross-subsidy surcharges and, therefore, solar power is a better option than expensive grid power. As such, companies across all major sectors, including services, manu- facturing, food and beverage, retail, materials, infrastructure, apparel, healthcare and pharmaceuticals, hospitality and transportation are switching to green power procure- ment. Fortunately, the Covid-19 pandemic has not had any major impact in halting or slowing down this transition.
On their part, developers find this huge untapped C&I market quite attractive in terms of contracts and revenues as they can get better tariffs and assured payments. Thus, this space has seen the emergence of a variety of specialised IPPs that prefer to work with only corporate clients. Moreover, large renewable energy developers have decid- ed to foray into this space, realising its many benefits.
In this age, when consumers are making sustainable choices and opting for climate- friendly brands, some of the larger corporates have announced plans to ultimately transition to zero carbon or use 100 per cent renewable energy in their operations. Statements from investors and lenders that they want to be associated with corporates that have green strategies in place have only furthered this agenda.
For instance, RE100, a global leadership initiative that brings together corporates com- mitted to 100 per cent renewable electricity, has more than 300 members today. And this trend is very much evident in India as well, with Indian businesses such as Infosys, Dalmia Cement, Mahindra Holidays and Resorts India, and Tata Motors being mem- bers of this coalition. The latest Indian establishments to join this initiative are the hos- pitality brand Chalet Hotels, and cement manufacturer UltraTech Cement. This trend is likely to continue with more corporates going down the green energy path, if the right business models and market dynamics are in play.