Despite the setback in renewable energy (RE) capacity addition in 2020 the demand for corporate renewable power purchase agreements (PPAs) is expected to surge in 2021 as a result of increased sustainability objectives of leading corporate buyers said the report by World Business Council for Sustainable Development (WBCSD) and JMK Research.
WBCSD is a Geneva-based CEO-led organisation of over 200 businesses that works in the area of sustainability.
In the last few years, Indian companies have been playing a key role in setting and implementing the country’s ambitious decarbonization trajectory, by driving deployment of renewable technologies through their purchase of renewable power.
Also, the government’s proactive reforms in the sector, including the new draft Electricity Amendment Bill and the privatisation of discoms, have aided in stimulating the uptake of corporate renewable PPAs.
“Based on the project pipelines it is estimated that in the next 12-18 months, companies will commission more than one gigawatt of new open-access off-site renewable electricity projects in India,” the report said.
Moreover, the country is also likely to see another 500-550 MW added under onsite rooftop OPEX models, resulting in capacity additions this year which could surpass in volumes observed in 2019.
According to the report, India has seen growth in corporate renewable sourcing and is the second-largest growth market for corporate renewable PPAs after the US in 2019, with the addition of 1.4 GW of capacity.
However, the country has also witnessed a significant slowdown in the corporate renewable PPA activity in 2020 — 800 MW as compared to 1.4 GW in 2019.
There factors that posed new challenges for corporate renewable PPAs in 2020, which were mostly state-level restrictions included delayed project approvals and additional charges and the COVID-19 pandemic. All this led to a pause in PPA negotiations and delayed the permit approvals due to restricted site access and suspended project construction.
According to the report, the evolving market dynamics from 2020 that are likely to impact the market 2021 is the first wind and solar hybrid corporate PPA commissioned in India, which will be a model for others to follow supported by waivers on open access charges for hybrid projects in several states.
2020 also saw increased adoption of rooftop solar PPAs to reach almost a third of cumulative onsite solar installations in India.
Moreover the use of the newly launched Green Term Ahead Market has been encouraging in the final quarter of 2020, as an alternative platform for companies to procure renewable power.
Given the encouraging drift in the sector, the report expects power demand to bounce back to pre-covid levels and the negotiations that were paused in 2020 due to the pandemic to resume in 2021.
Corporate buyers such as Tata Motors, Infosys, Sony, Mahindra Holidays & Resorts, Tata Motors, Accenture, Adobe, Ikea, Panasonic, Sony and Starbucks, which have operations in India, have voluntarily pledged to meet 100 per cent of their electricity demand with renewable electricity through the RE100 initiative.
Additionally, developers such as CleanMax, AMP Energy, Enrich Energy, and Amplus Solar have also planned substantial additional capacity development for the coming years, according to the report titled ‘Corporate Renewable PPAs in India: Market & Policy Update’.