The industrial sector, accounting for a third of the aggregate carbon emissions, is undergoing rapid development in India. As urbanisation and the expansion of the manufacturing and infrastructure sectors continue, the contribution of industries to carbon emissions is expected to rise. Consequently, it becomes imperative to implement technological innovations and carbon-neutralising mechanisms to mitigate both current and anticipated future emission levels. Also, a surging demand for zero-carbon technologies, materials and services gives companies opportunities to build new green businesses.
Power Line takes a look at the latest trends and developments in renewable energy procurement and development…
Solar and wind energy
Technologies such as wind and solar energy will be key in propelling the transition to net zero. The solar power market in India has undergone rapid expansion in recent years, surpassing all other clean energy sources and reaching a total installation of 73.3 GW as of December 2023. With a concerted government effort to promote solar energy adoption, this growth trajectory is expected to persist, playing a pivotal role in India’s pursuit of achieving 500 GW of non-fossil-fuel electricity by 2030. The government has set ambitious targets for the same year, with plans for achieving 500 GW of non-fossil-fuel-based capacity, including 280 GW of solar and 140 GW of wind. To meet these objectives, it has committed to auctioning approximately 50 GW of renewable energy capacity annually for the next five years, a process facilitated by central renewable energy implementing agencies such as NTPC Limited, Solar Energy Corporation of India Limited (SECI), NHPC Limited and SJVN Limited.
Additionally, with the amendment to the Green Energy Open Access Rules, the transition to renewable energy (especially solar) in the commercial and industrial (C&I) sector is expected to become smoother. This move aims to make solar power more appealing to both producers and consumers in these sectors. These rules represent a radical policy shift, with the government clearly communicating its intent to make green open access more streamlined. This policy shift is expected to create new business models in the open access space.
Going forward, aggregators may emerge to aggregate demands from small players. They will then approach C&I developers to sign power purchase agreements (PPAs) as small players may find it challenging to directly handle such tasks.
Another key trend is that C&I consumers are also now demanding round-the-clock renewable energy from developers. To meet these specific demands, developers are increasing the capacity of solar-wind hybrid projects and selling the excess electricity generated on the power exchange. Such projects help reduce off-peak issues. Hybrid projects offer benefits such as reduced risk due to the lower generation variability of the combined technologies and better utilisation of transmission infrastructure. Notably, Andhra Pradesh, Gujarat and Rajasthan have introduced policies for hybrid projects.
Green hydrogen
The government has sanctioned the National Green Hydrogen Mission, allocating a budget of Rs 197.44 billion until 2029-30 to support the sector. In addition, a number of Indian enterprises have declared their intention to invest in the burgeoning hydrogen economy.
For instance, the ACME Group signed a land agreement with Tata Steel Special Economic Zone Limited for developing a green hydrogen and green ammonia project on 343 acres of land. The project will be implemented at the Gopalpur Industrial Park in Ganjam district of Odisha. ACME intends to develop a 1.3 mtpa green ammonia plant. The green ammonia produced at this plant will be shipped from Gopalpur port to markets in the west and east.
Larsen & Toubro Limited, in collaboration with ReNew and Indian Oil Corporation Limited (IOCL), announced its plan to invest Rs 320 billion in green hydrogen projects with a focus on electrolysers, green hydrogen plants and green ammonia projects to supply green hydrogen on an industrial scale. It also plans to invest around Rs 5 billion in electrolyser manufacturing.
Amplus Solar entered into an MoU with the Andhra Pradesh government to set up multiple decentralised green hydrogen production plants in the state. The company aims to set up 7.5 ktpa distributed green hydrogen plants for industrial consumption with an investment of Rs 15 billion. These include on-site hydrogen production plants and off-site wind and solar energy plants.
The UAE-based Ocior Energy plans to establish a 1 mtpa green ammonia plant in Andhra Pradesh. The project will be executed with an investment of Rs 400 billion. The company has entered into an MoU with the Andhra Pradesh government for setting up the project.
Furthermore, various public entities have announced their plans in this space. REC Limited has signed an MoU with the Avaada Group, committing Rs 150 billion for the development of a green hydrogen and ammonia facility in Gopalpur. IOCL is entering the green hydrogen production space with a 10 ktpa plant planned in Panipat. The company has invited global tenders to develop the facility on the land next to its Panipat refinery. It is planning to integrate this green hydrogen generation plant with the Panipat refinery’s existing hydrogen network. The plant will operate round the clock and produce around 1,250 kg of green hydrogen per hour.
Hindustan Petroleum Corporation LimÂiÂted is implementing a green hydrogen project at the Visakhapatnam refinery in Andhra Pradesh. The project will have an electrolyser capacity of 370 tonnes per annum. The company has already spent Rs 110 million out of a total allocation of Rs 330 million for the project.
Further, mega tenders are coming up by different agencies. In 2023, SECI issued a tender for the selection of green hydrogen producers for setting up production facilities in India under the Strategic Interventions for Green Hydrogen Transition Scheme, Mode I Tranche I. The total capacity to be allocated under this tender is 450,000 mtpa, which is divided into two buckets: Bucket 1 – 410,000 mtpa under the technology-agnostic pathway, and Bucket 2 – 40,000 mtpa under the biomass-based pathway In January 2024, SECI declared winners of its 450,000 million tonnes green hydrogen manufacturing auction. At an average incentive of Rs 18.90 per kg, Rs 30 per kg, respectively, and Rs 30 per kg, Reliance, Greenko and ACME won a capacity of 90,000 mt each. Other winners in this category were Welspun New Energy (20,000 mt for Rs 20 per kg), JSW Energy (6,500 mt for Rs 34.66 per kg), Hygenco (75,000 mt for Rs 25.04 per kg) and Torrent Power (18,000 mt for Rs 28.89 per kg). At a zero-average incentive, Calcutta Electric Supply CorpoÂration Projects and UPL won 10,500 mt and 10,000 mt respectively. Under 1 Bucket, the entire capacity was allotted. While under 2 Bucket, Bharat Petroleum Corporation Limited won 2,000 mt for Rs 30 per kg. The remaining capacity of 38,000 mt was unallocated. The projects need to be completed within 30 months of receiving the letter of award.
Meanwhile, NHPC issued a tender to establish a pilot project for a green hydrogen-based mobility station in Kargil, Ladakh, to operate two hydrogen fuel cell-based buses in the area. The project entails the installation of two units with a capacity of 30 Nm3 per hour. The expected daily hydrogen production target is 40 kg, with a minimum purity level of 99.97 per cent.
NTPC Green Energy Limited (NGEL) signed MoUs with different companies in the green hydrogen space. It signed an agreement with Syama Prasad Mookerjee Port to set up a green hydrogen hub in Kolkata. In a separate development, NGEL signed an MoU with Nayara Energy to explore prospects in the green hydrogen and clean energy space. The companies will work together to manufacture green hydrogen for captive use by Nayara Energy and expedite decarbonisation. In addition, NGEL signed an MoU with HPCL Mittal Energy Limited to explore opportunities in the green hydrogen business and its derivatives such as green ammonia and green methanol.
Role of ESS
Currently, renewable energy developers and utilities are the primary proponents of energy storage, announcing numerous projects in this domain.
In November 2023, Madhya Pradesh Power Management Company Limited bid for a 500 MW energy storage project with a discharge duration of six hours and a maximum continuous discharge period of four hours. In the same month, SJVN Limited’s auction to supply 1.5 GW of power from ISTS-connected renewable energy with energy storage was won by seven bidders. ACME Solar, Juniper Green and Tata Power Renewables have all quoted a tariff of Rs 4.38 per kWh to win 250 MW, 200 MW and 200 MW respectively. Meanwhile, the four remaining bidders quoted Rs 4.39 per kWh. These include ReNew, which won 184 MW; Solarcraft Power (BluPine), which won 150 MW; Hero Solar, which won 120 MW; and TEQ Green, which won 80 MW. In October 2023, NHPC Limited issued a requests for proposal for the selection of project developers to deliver firm and despatchable power from 1,500 MW ISTS-connected renewable projects, including ESSs.
Additionally, in RUVNL’s auction to develop 1,200 MW of solar projects with a minimum six-hour delivery from ESSs during peak demand, BluPine Energy and ACME emerged as winners with respective quantities of 100 MW and 500 MW at a tariff of Rs 6.68 per kWh and Rs 6.69 per kWh respectively, in August 2023.
In June 2023, SJVN Limited invited bids for 1,500 MW of power from ISTS-connected renewable energy projects with energy storage capacities across India. In July 2023, Serentica Renewables signed an energy storage capacity offtake contract with the Greenko Group, leveraging 1,500 MWh of capacity from upcoming energy storage projects in Andhra Pradesh and Madhya Pradesh.
In December 2022, Ayana Renewables and NTPC REL secured a tender from Maharashtra State Electricity Distribution Company Limited for 250 MW of flexible power from grid-connected renewable energy projects, including an energy storage facility. In the same month, the Greenko Group emerged victorious in NTPC REL’s auction, earning the right to establish 3 GWh of ISTS-connected energy storage systems. SECI floated bids for a 2 MW solar project in Kaza, Himachal Pradesh, as well as a 1 MW battery energy storage system in February 2023.
ESSs also play a pivotal role in providing a reliable and continuous power source for the C&I sector. By storing excess energy during periods of low demand or high renewable energy generation, such systems mitigate the impact of intermittent power sources and grid fluctuations. This stored energy can then be efficiently utilised during peak demand periods or when the primary power supply is limited. In addition to ensuring a stable power supply, ESSs contribute to load balancing, reducing the strain on the electrical grid and enhancing overall grid resilience. This versatility makes them invaluable for commercial and industrial applications, allowing businesses to optimise energy consumption, improve operational efficiency, and potentially reduce overall energy costs. Moreover, these systems facilitate the integration of renewable energy sources into the grid, promoting sustainability and environmental responsibility within the C&I sector.
Recently, the Ministry of Power introduced the National Framework for ProÂmoting Energy Storage Systems, aligning with the country’s commitment to utilise renewable energy sources and mitigate greenhouse gas emissions. The primary objectives of this framework include fostering ESS deployment, decreasing reliance on fossil fuel power plants, ensuring a consistent supply of real-time continuous renewable energy, reducing emissions, and minimising energy costs. Additionally, it seeks to stimulate innovation in energy storage technologies, facilitate equitable access to energy storage across all population segments, and enhance grid stability and reliability through widespread ESS deployment. Furthermore, the framework aims to leverage policy and regulatory measures, financial and fiscal incentives, and performance-based incentives to support the development and installation of ESSs.
Challenges and outlook
The demand for renewable energy by the C&I sector is expected to grow significantly, driven by the country’s strong commitment to decarbonisation and the announcement of the net zero goal by 2070. Despite the major attention given to utility-scale solar plants, the C&I sector is the largest consumer, accounting for almost half of the nation’s power consumption. Factors fuelling this demand include global corporate environmental mandates, the economic feasibility of renewable energy due to an 80 per cent reduction in tariffs over the past decade, and technological advancements such as affordable battery storage. Emerging markets, such as virtual power plants and independent renewable energy certificates, also contribute to the sector’s momentum.
With India’s rapid economic expansion, escalating power demand and the introduction of the Green Energy Open Access Rules, the C&I market for renewables is poised for substantial growth. Government initiatives, regulatory support and the availability of sustainability-linked loans further enhance the positive outlook.
However, challenges in implementation across states underscore the need for streamlined processes and unified efforts to ensure sustained growth in the sector’s transition to green energy. Frequent policy changes and uncertainties around incentives can discourage investors and project developers.
In sum, the initiatives for achieving a more sustainable and net zero future are encouraging. Government efforts, regulatory interventions and increasing investor interest are all playing important roles in fostering a positive outlook.