Indian companies may go green to meet power needs by 2020
Under RE100 initiative, 100 large firms will rely exclusively on solar, wind, biomass or small hydro plants for their power needs by 2020.
RE100, convened by international non-profit agency The Climate Group and sustainability firm CDP, has 15 members at present, including Elion Resources Group, one of China’s top private enterprises, which has committed to rely entirely on renewable energy by 2030.
"We are talking to a number of Indian companies and will announce a name in two weeks’ time," Mark Kenber, CEO of The Climate Group told ET. According to Kenber, there are a number of reasons for focusing the campaign on India, the primary one being that companies suffer disruption of business activities due to power cuts and end up paying a lot more for expensive back-ups. "By investing in thirdparty power purchase agreements or installing their own power sources, companies get to lock up not only long-term electricity prices, which helps them save, but also earn returns from their clean installations, as is happening in China," Kenber added.
A new report, ‘China Analysis 2015’, by The Climate Group points out that the (Chinese) central government increasingly sees the opportunity for stimulating businesses — the biggest end-users of energy — and has introduced a number of incentive schemes for renewable energy investment that are already attracting interest.
RE100’s founding partner, Ikea, has committed to producing renewable energy equivalent to at least 70% of its consumption by 2015 and to producing as much renewable energy as it consumes by 2020.
This includes the energy used by the company’s own manufacturing operations. By 2013, half of IKEA’s stores in China had gone solar, with yearly electric energy production now topping 1.6 million kWh.
Several companies in China, including L’Oréal and P&G, have taken the initiative to secure renewable electricity through agreements with their local electricity providers.
"China has provided support for the demand side of the energy equation by giving subsidies to corporates for in-house power generation. The returns are between 5% and 20 per cent. Companies do it purely for economic reasons," he said, adding that when policy and incentives are put in place, businesses respond. Certain cities and regions are also pioneering new forms of purchasing contracts that provide companies with opportunities to source green electricity directly from the grid, says the report.
China, the world’s leading investor in renewable energy, increased its investment to $89.5 billion in 2014, up 32 per cent from that in the previous year. This was nearly 73 per cent more than the United States, the next largest investor.
Just like China, Kenber said, India too should put more emphasis on the demand side, by providing companies with more subsidies for their own production, as opposed to only supply side or large utility scale projects.