Corporate renewable energy sourcing: way to 100% renewable

by Atul Mudaliar, Senior Manager – Energy Transitions (India), The Climate Group and Shailesh Telang, Technical Manager (renewable energy), CDP

The emergence of a new threat – COVID-19 – has shaken the world and renewed calls for a more resilient and sustainable economies. Amid this, we are also at the start of the Climate Decade – a moment in history where greater and faster action is vital to address the looming threat of climate change. This being a critical year, the start of the climate decade, our focus on transitioning to low-carbon, resilient energy systems must not falter.

India is committed to have a national grid with 40% installed electric capacity from non-fossil fuels by 2030, under the Paris Agreement. As of March 2020, the country already stood at 24% (87GW) of renewable energy installed capacity (not including large hydro projects).

While governments navigate plans and policies to further push the adoption of renewable energy, businesses are making strong commitments to help transition to low-carbon energy systems. Decisions taken today will set the strategic direction and preparedness of power systems that can challenge future crises for years to come.

Businesses moving us forward

Now more than ever, businesses are not stepping back in their commitment to accelerate the transition to clean energy systems and meeting their sustainability goals. This is especially so when it comes to the power sector. Corporate (industrial and commercial sector) electricity demand accounts for about 50% of total electricity consumption in India and globally. Businesses are thus a major market force to drive the decarbonization of the power sector.

Globally, we are seeing greater ambition from businesses driving transformative changes for a clean energy system. Infosys, Dalmia Cement, Mahindra Holidays & Resorts and Tata Motors – are Indian-headquartered companies that have voluntarily adopted 100% renewable electricity consumption targets by joining The Climate Group and CDP’s RE100 initiative. Additionally, there are more than 40 international RE100 companies that have India presence and are moving their operations to renewable energy.

Further, data disclosed through CDP shows a steady rise in climate commitments and action by Indian businesses. In 2019, 50 Indian companies reported greenhouse gas (GHG) emission reduction targets. About 23 companies have reported renewable energy targets and about 32 companies have identified energy-related opportunities in their direct operations and in their supply chain. A majority of these companies have estimated opportunities worth ₹285 billion in the use of low-carbon sources of energy.

Higher adoption of renewable energy by corporates is rapidly shift global energy markets to an increasingly de-carbonized energy system. In 2019, companies committed to RE100 grew by over a third, bringing the total count to 232 companies, with 3 in every 4 companies targeting 2030 to achieve 100% renewable electricity. Even in difficult economic times, businesses are stepping ahead on climate – more recently, Coty, one of the world’s largest beauty companies, Refinitiv, a global leader of financial markets data and infrastructure, and Mastercard, have joined RE100.

In terms of cumulative energy demand, RE100 companies consume 236 TWh of electricity. If they were a country, RE100 members would be the 20th largest electricity consumer in the world, approximately the size of Indonesia. Interestingly, 44% of new joiners to RE100 in 2019 come from across the Asia Pacific. Indian members like Infosys Limited and Tata Motors are sourcing considerable amount of renewable energy.

Voices from businesses

In these times of the pandemic, businesses will face large scale disruptions. While they will rally for business continuity and consolidation, many would continue to invest in climate-friendly policies and decisions to future-proof their business. Now, they are finding ways to navigate the changing RE ecosystem to better establish their commitment to RE sourcing.

Infosys, a RE100 member, has already transitioned 46% of their overall energy consumption to be from renewable energy sources (as of 2019). When asked on their continued motivation, and accelerators to reach 100%, Bose Varghese, Head of Green Initiatives said;

“We are convinced that renewable energy is the biggest lever available to us in the fight against climate change. Technology and infrastructure have become much more available and economical making the transition to 100% renewable energy attainable. Moreover, our country has a huge potential to transition completely.”

When asked about levers to push greater growth for renewable energy, he said:

“While the transition to renewable energy is progressing rapidly at the national level, with our power grids carrying more and more renewable electricity than ever, we are still far from turning the grid to predominantly renewable. Meanwhile, there are many entities, like us, that would like to transition to 100 percent renewable energy and quickly. Aligning policies across the states to facilitate this would make a huge difference in attaining our ambitions at an entity level, as well as, nationally.

The ideal scenario is one where you can get certified renewable energy delivered by the Electricity Supply Companies at the prevailing power cost. This will avoid a lot of procedural complexities and, more importantly, keep the cash flow of the ESCOM intact. Today, this is looking increasingly feasible with the significant drop in renewable energy generation costs. The next best solution would be to have alternate mechanisms to procure renewable energy through power exchanges, or other third parties, with the landed cost not exceeding the prevailing grid-power cost. Additionally, the captive option should be made viable in all states.”

Decathlon, another RE100 member, is determined to drastically reduce their carbon emission across their operations. They have committed to a group-wide target to reduce per product emissions by 40% between 2016 to 2026 for all activities including scopes 1, 2 and 3.

Deepan Prakash, the Sustainability and Innovation Leader at Decathlon re-emphasised their commitment to supporting reduced carbon emissions:

“India is a developing economy and has an increasing energy demand to fulfil the economic development plans that are being implemented. Close to 77% of our energy demand is supplied by fossil fuels so there is an urgent need to find alternate sources for generating electricity to achieve sustainable growth and avoid catastrophic climate change.

Decathlon has identified reducing greenhouse gas emissions as one of our priority challenges in 2013. In 2017 we increased our oversight of emissions-measuring efforts and in 2018 we expanded these to our product suppliers.”

On understanding hurdles for complete renewable energy adoption, especially in the current climate, he said:

“The prime hurdle for achieving RE100 in India through direct routes is volatile policy and regulatory framework. The uncertainty in net-metering and open access renewable energy policies are not giving us a confidence to take firm decisions in achieving RE100 goals through direct renewable energy procurement.

With advancements in technology and the energy storage industry, achieving 100 percent is technically feasible even without any support from grid, but high costs continue to pose a problem for complete adoption. This will instead push companies to procure renewable energy attributes (through an indirect method), possibly adding a financial burden especially during crisis situations like what’s happening all over the world right now.

To expand renewable energy in healthy way, industrial and commercial consumers should be enabled to procure up 100% renewable energy from the grid (wheeling, banking, and net-metering). Restrictions by a few states allowing net-metering for LT consumers only should be relaxed, open access for commercial and industrial LT consumers should be allowed, and inter-state renewable energy wheeling be made more lenient.”

RE100 companies are demonstrating their climate commitment and leadership by influencing others as well. Apple Inc launched the Supplier Clean Energy Program to advance the use of clean energy in their supply chain encouraging them to source more than 4 gigawatts (GW) of new clean energy by 2020. Apple supports supplier transitions to clean energy via working with them to advocate for policy change in key markets, connecting suppliers with high-quality clean energy projects and developers.

Looking ahead

While greater alignment between central and state policies on corporate renewable energy sourcing and its enforcement is required, business have also started demanding for the regulatory frameworks to open up to alternative instruments such as green tariffs, virtual PPAs, special trading of renewable electricity on energy exchange, and others. Companies leading our transition towards 100% renewable energy must be rewarded (possibly through special policy incentives), helping them generate higher demand, influencing their peers and supporting India’s goals of a 175 GW of renewable energy by 2022.

The impact of COVID-19 is a stark reminder of the fragility of our global systems. Within a matter of weeks, we have seen our economic systems take a beating, leaving us with uncertain outcomes. The impact on public health, people in their masses moving from urban to rural areas for shelter and sustaining livelihoods all pose challenges for the Indian government. Amid these major shifts, comes an opportunity for us to continue to work towards designing resilient systems that can help us overcome challenges of humanity and the planet.

It is not the time to be side-tracked by inexpensive oil and gas because it is a temporary phenomenon while the long-term business case for renewable energy will persist with greater technology improvements in solar and storage, dropping prices, and with higher regulatory costs of fossil-fuel based energy.

The country’s efforts to transition to a renewable energy technology, reshaping investments, generating new jobs and creating wealth in the sector can help create possibilities for healthy, resilient and thriving future economies. However, to secure a leadership position, it must accelerate the transition to clean power with levers such as knowledge, technology, partnerships and policy.

First published in Energetica India.

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