By Gautam Heble, Senior Associate-Business Development, AMPIN Energy Transition
Corporate entities are becoming very important in India’s transition to become a global leader in renewable energy. India is committed to having a national grid with 40 per cent installed electric capacity from non-fossil fuels by 2030, under the Paris Agreement and the Commercial and Industrial sector accounts for more than 50 per cent of the Indian electricity demand. Some ways corporate entities can ensure economic growth and energy security while simultaneously contributing to environmental sustainability are using green bonds, corporate power purchase agreements (PPAs), and sustainable business practices. This article provides an overview of how these mechanisms are influencing India’s renewable energy sector.
Corporate PPAs
Through these agreements, businesses can purchase energy from renewable sources and gain long term price stability and visibility with minimum investment, unlike existing conventional energy sources. Due to reducing costs of technology in renewable energy, PPA’s are at a significantly lower cost as compared to the conventional energy costs which helps corporates save on input costs as well as procure green energy and contribute to the RE100 goals. This programme highlights how PPAs can be a strategic tool for businesses looking to lower their carbon impact and is in line with their ambitions to become carbon neutral.
Green Bonds
Green bonds are mainly debt products designed with the purpose of raising capital for environmental and climate-related projects. They provide a means for businesses to attract eco-aware investors while funding renewable energy projects and other sustainability efforts. The issue of green bonds has increased significantly in the Indian market. Some common forms of bonds utilised in the industry are renewable energy bonds mainly utilised for projects to be set up, climate change bonds used for projects to mitigate climate change and energy efficiency bonds for projects set up to increase efficiency and reduce energy consumption.
Sustainable business practices
Adoption of renewable energy is largely dependent on sustainable business practices, which go beyond PPAs and green bonds. Businesses are incorporating sustainability significantly into their primary business strategy, emphasising resource optimisation, waste reduction, and energy efficiency. Businesses are implementing these strategies into their existing processes and doing their part in reducing their negative impact onto the environment. Energy efficiency is a powerful tool in sustainability as it focuses on reducing energy consumption for existing processes.
Impact on the Indian market
The Indian market is greatly impacted using renewable energy as it assists in decreasing reliance on fossil fuels, diversifying the energy mix, and lowering the risks related to fluctuations in energy prices. Companies can also improve their brand, comply with regulations, and attract investors and customers who worry about the environment by committing to renewable energy. Additionally, this change fosters innovation and opens new business prospects for the renewable energy industry. For example, new wind and solar projects have been developed because of the expansion in adoption of power purchase agreements, which has stimulated the renewable energy sector. Introduction of green bonds has made a substantial amount of finance available for sustainable projects, enabling the development and modernization of the renewable energy infrastructure.
Challenges and the way forward
Even with the advancements, scaling up the adoption of renewable energy through these techniques remains difficult. Technical obstacles, high upfront prices, and regulatory uncertainty may prevent the broad use of renewable energy sources. Government, business, and financial institutions working together is crucial to overcoming these obstacles. Adoption of renewable energy can be facilitated by policy frameworks that guarantee grid stability, expedite regulatory procedures, and offer incentives for renewable energy investments. Furthermore, raising public awareness of the advantages of sustainable practices and renewable energy can increase demand from customers and motivate more businesses to launch green projects.
Conclusion
PPAs, green bonds, and sustainable business practices are some of the instruments that corporate organisations can use to promote the use of renewable energy and energy efficiency. Businesses can use these processes to help preserve the environment and ensure the country’s energy security in addition to achieving their sustainability goals. India is getting closer to achieving its goal of an energy future that is robust and sustainable as more businesses choose renewable energy.
