Cos take green path to save costs and sustain growth

A selection of Indian corporations are cutting costs and contributing to a green economy by embracing clean fuel and India Inc sees a strong business case in adopting renewable energy to power their operations.

Illustration: Dominic Xavier/Rediff.com.

Tata Motors recorded savings of Rs 66.63 million in the financial year 2017-2018 by sourcing and generating a total of 99,382 MWh of renewable electricity to power its manufacturing operations in India.

The company is not alone.

Other big corporates like Infosys, Wipro, Cognizant, ITC, and JK Tyre, too, are increasingly rooting for green and clean power with the twin objective of saving cost and achieving sustainable growth.

According to Bloomberg NEF, globally, private enterprises and public institutions have signed contracts to purchase over 7 gigawatts of clean energy so far this year as compared to 5.4 gigawatts in 2017.

India Inc sees a strong business case in adopting renewable energy to power operations.

“Tata Motors’ manufacturing processes consists of energy intensive (ones) that contribute nearly three-fourths of the carbon emissions from our manufacturing operations. We are using renewable energy to power our manufacturing operations to cut down the carbon footprint,” says Arvind Bodhankar, head, sustainability, Tata Motors.

Given that most corporations that are in manufacturing have high-power requirements, investment in renewable energy is clearly the best bet to save costs. At present, the cost of solar power ranges from Rs 2.05 per unit to Rs 5 per unit across Indian states depending on open access charges and added tax levies. This is still lower than traditional power that is priced at Rs 7 to Rs 8 per unit for commercial users, according to some of the spokespersons BS spoke to.

Over the last three years, Tata Motors, for instance, has increased the share of renewable energy in its total electricity consumption from 8.44 per cent to 21 per cent. The company has an installed solar capacity of 6.11 MW. It is working towards adding another 6.7 MW of capacity this year. As regards wind energy, the carmaker has its own assets of 21.95 MW and a power purchase agreement with third party provider for 30 MW of power.

“Investment in renewable energy assets is done based on techno-commercial feasibility. Energy audits, benchmarking, continuous review of performance and target setting ensure progressive reduction in specific energy consumption,” says Chitranjan Dar, group head, sustainability, research and development and projects, ITC Ltd. It is estimated that ITC’s cost savings on account of this would be upwards of 50 per cent.

Information technology firms in India is another set of big power consumers. Most of the electricity consumption for firms such as Infosys and Wipro is in running their facilities. The campuses at these companies largely rely on renewable energy installations such as solar power plants that are grid connected and offset a part of their electricity consumption in the campus.

Infosys, for one, aims to source 100 per cent of its electricity from renewables over the next two years. It has a total installed capacity of 46 MW of solar PV plants. The company sourced about 44 per cent of the total electricity consumed from renewables (including green power purchase) in 2018.

Ramadas Kamath, executive vice-president and head, facilities, administration, security and sustainability at Infosys, says, “We were the first Indian company to join the global RE100 campaign, with a commitment to go 100 per cent on renewables. Our strategy is multi-pronged -- install onsite solar PV plants in all our campuses, covering roof tops of buildings and some ground mount installations within campuses, offsite solar PV plants installed for captive usage purpose, and to purchase green power from third party renewable energy generators.”

IT firm Cognizant derived about 18 per cent of its overall energy consumption in India from renewable sources of energy in 2017.

“To cut energy costs and go green, we have set a target of reaching 22 per cent of the company’s energy consumption to be fulfilled from renewable energy,” says R Ramkumar, executive director, India, Cognizant.

At JK Tyre, the majority of renewable energy is used to power the manufacturing plants located in Chennai and Mysore. Anil Kumar Makkar, manufacturing director, JK Tyre, points out that the company has power requirements in excess of 250 million units per year for plant operations across India.

“Currently, 37 per cent of our power requirements are met by renewable energy sources, including wind and solar. By end of next financial year, we aim to increase the share of renewable energy in our total power consumption to 45 per cent.” The company claims that it has recorded savings over Rs 100 million by using renewable energy in last year.

Even as companies look to increase the share of renewables in their total energy consumption mix, challenges abound. For most of the companies, energy generation is not their core competency and expertise, suggests Makkar of JK Tyre. To overcome this, most players use a mix of own installation plus buy power from third party suppliers.

Mahesh Makhija, director, business development and commercial, renewables, CLP India, which is into solar and wind power generation, suggests that access to cheap power and reducing reliability on the grid are the two key reasons why many firms are opting for renewables.