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Vikram Madan, a 39-year-old renewable-energy professional based in the northern Indian city of Noida, quit his high-paying job as a business-development director at a solar-power producer in 2021. He then started a consultancy that helps companies ink deals to buy green power directly from producers.

He couldn’t have timed his move better.

In 2022, India emerged as the biggest market for corporate power-purchase agreements corporate power-purchase agreements PPA A corporate PPA is a long-term contract under which a business agrees to purchase electricity directly from a producer. (PPAs) in Asia-Pacific for the second year in a row. According to the energy-research firm Wood Mackenzie Wood Mackenzie Wood Mackenzie The power of the PPA: corporate renewable procurement sets a new record in Asia Pacific Read more , companies in the region are likely to have signed deals amounting to a record 7 gigawatts (GW) of renewable capacity in the year—up ~80% from 2021. And, of the 18.6GW of corporate PPA capacity contracted until now, India accounts for 44%.

The demand for corporate PPAs is set to “explode” in India in the next few years, says Madan, who has worked with the country’s power-sector heavyweights such as Reliance Infrastructure, Renew Power, and, most recently, Cleantech Solar. And there are enough reasons for him to be bullish.

For one, corporate PPAs allow companies to purchase clean energy at a cost that is 10-50% lower—depending on respective state policies—than if they were to buy it from a distribution company (discom), says Madan. The reason: discoms charge commercial and industrial (C&I) customers higher tariffs to recoup their losses and subsidise prices for residential and agricultural buyers.

These deals also help sustainability-focused companies ensure that they are, in fact, consuming green power.

And there is enough room for the market to grow. While corporations consume almost half of the electricity generated in the country, corporate PPAs facilitate only 2% of that consumption.

In June 2022, the Indian government also introduced green-energy open-access open-access Open access Open access enables commercial and industrial consumers to choose from a number of power companies in the open market rather than being forced to buy power from the local utility monopoly. rules that reduced the load limit for contracting renewable energy from 1 megawatt (1,000 kilowatts) to 100 kilowatts (kW), making it easier for smaller companies to buy green energy.

“Lowering the threshold has the potential to unlock the demand and expand the market multifold,” says a senior executive at a solar-power supplier. They didn’t want to be named as they weren’t authorised to speak with the media.

AUTHOR

Shruti Sonal

Shruti is a Delhi-based reporter who looks at India's clean energy ecosystem through the lens of the intersection between businesses, policy and environment. She has previously worked with Reuters and Outlook Business.

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