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Infosys, ACC support national efforts for Green Power Market Development

On January 29th 2014, Green Power Market Development Group (GPMDG) met for the first time in New Delhi. Essentially, the group aims to aggregate captive and bulk consumers who wish to buy clean energy and hence, it is a platform to create a 'demand pull' for clean energy developers. A model of the GPMDG was successfully run in Karnataka, as many of the IT companies in Bangalore provided the demand pull for clean energy. Mr. Rohan Parikh, ‎Head Infrastructure and Green Initiatives at Infosys, pointed out there were many opportunities to create momentum by developing CSR demand to kick start supply - one of the aims of GPMDG as it scales up to other states in India.

From captive in-house generation to RE procurement and group capture

There is a demand for clean energy, and a capacity to pay premiums, largely stimulated by high energy corporate consumers seeking energy (and hence production) security, and for some, to realise branding and CSR benefits. ACC Ltd, another member of the group, revealed at the national launch that it recently made arrangements with 5 different companies to procure renewable energy.  

ACC Cement has two drivers for adopting RE, as Mr. K N Rao, Director Energy and Environment at ACC Limited explained. These two drivers are, firstly, ensuring energy security and secondly, curbing energy cost inflation.Almost 50% of cement cost is energy cost, and in order to meet its own 15% green energy use target, ACC Limited moved away from generating RE in-house. CAPEX  and land constraints were key factors driving ACC Limited to procure green energy externally.

Some concrete opportunities to better faciliate RE included enabling easier group capture for heavy use consumers; making it easy for buyers and sellers to connect; enabling a quicker approvals processing via online due diligence /approvals.

Enhanced energy trading to replace utlity driven energy markets, and catalyse green power

There was a strong desire expressed at the launch to move to a non-utility driven market place for electricity, where multiple RE generators could directly trade with a range of electricity retailers and buyers.  One-to-one energy sales via PPAs is not conducive to good green power market development, as Mr. S Chandreshekar, Managing Director Bhoruka Power Corporation Limited, pointed out.

"Intra-day market needs to be more liquid", said Rajesh Mendiratta, Director,Indian Energy Exchange (IEX), in context of enabling RE generators to play a greater role in selling energy. For Mendiratta, opportunities lie in enabling better metering, grid efficiency, auto-approvals. For example, state approvals and clearances for out-of-schedule changes take 1 week, whereas in other countries with on-grid energy trading markets, a generator need only give a few hours notice for a generation change. Further, Mendiratta noted a regulation barrier for green power, where generators will require some level of limited permissible trading licenses.

Without energy trading, as Mr. Chandeshekar points out, the number of ways for developers in India to sell electricity remains limited- i.e. through the REC market, via Open Access or through Power Purchase Agreements. Of these, RPO enforcement is poor and RECs have no value in the market. Open Access mechanisms are threatened by a change in regulation (for cross subsidy, wheeling and banking, and stand-by charges) at the state level which makes development margins risky. Hence, safest bet for developers are PPAs, as it locks in terms of agreement for 20-25 years, and the state buys most of the electricity.

System enhancements & standalone green power solutions will create momentum

Another quick wins area was to support and catalyse uptake of stand-alone solutions for renewable energy, GPMDG panel noted, to enable momentum even as other state, government and non-government stakeholders worked to increase the level of comfort around grid-based renewable energy solutions.

In face of status-quo infrastructure and regulatory landscape, Parikh further supported driving pricing down for renewables towards grid-parity by aggregating demand of current green power buyers, and driving down cost of risk through long term arrangements.

 Most RE generation will be offsite and good systems operators will be required to enable a green power market, Mr. Deepak Gupta, Program Manager at the Shakti Sustainable Energy Foundation, emphasised while on the GPMDG panel. For Gupta, even large scale rooftop solar will eventually require systems support. "To truly scale up RE, you will need to exhaust and generate much beyond the ~ 10,000 MW potential for rooftop solar...and, improving systems operations in India will require new technologies."

According to media reports, signatories include 3M India Ltd, ACC Ltd, Bearys Group, Bhoruka Power, Bosch, Cognizant, DGEPL, Enerparc Energy Pvt Ltd, Green Fields Power, Godrej, HSBC, IBM, Infosys Ltd, Intelligent Energy, ITC, Jones Lang Lasalle, KREDL, MPPL, Nagarjuna Hydro Energy Pvt Ltd, Orient Green, Persept Solar, Shakti Foundation, Tulip Data Center, Vasavdatta Cement, Wellspun, World Resources Institute, Wipro, and Yes Bank. 

The group aims to facilitate sharing of renewable energy (RE) procurement experiences, strategies, financing approaches and tools, covered by a collective non disclosure agreement. 


Image Credits: Catatronic, Dave Parker