India’s metal producers are speeding up their transition to renewable power after a coal crisis led to a supply crunch and sky-high prices of the fossil fuel, according to Greenko Energy Holdings.
GIC Pte.-backed Greenko, one of India’s largest renewable energy companies, signed an agreement earlier this month with Hindalco Industries Ltd. to provide carbon-free electricity to the aluminum producer’s Odisha smelter for 25 years, following a similar deal with ArcelorMittal Nippon Steel India Ltd.
Greenko is now in talks with two to three other metal producers for round-the-clock power supply, co-founder Mahesh Kolli said, declining to name the firms.
The coal crisis is “a big factor that accelerated this transition” to renewable power from coal-based energy usage, Kolli said in an interview. The metals industry in India is willing to invest in renewable energy and build solar plants, adding a big funding source for clean energy, he said.
The country is emerging from an acute power crisis after a blistering summer and a post-pandemic industrial revival, which spurred electricity demand and overwhelmed domestic coal output. That prompted some metal producers to scour global markets for supplies, where prices are trading near record levels.
The increased expenses slashed profits of some of the biggest mills in India at a time when commodity prices were rallying to multi-year highs. They are now exploring ways to minimize their dependence on coal, with renewable energy looking more attractive.
“In this carbon-free energy that we are giving, this price is fixed for the next 25 years,” Kolli said. “So now at least when the price goes up, they benefit a lot.”
Founded in 2004, Hyderabad-based Greenko develops solar, wind and hydro power projects with 7.5 gigawatts of operating capacity across 15 states in India. Aside from GIC, it counts Abu Dhabi Investment Authority and Japan’s Orix Corp. as investors.
Greenko uses hydro-pumped storage technology to ensure round-the-clock power to the mills. Unlike Europe and the US, where storage costs are high, developers in India have been following a similar model to China and have managed to control the expenses using this cheaper technology, Kolli said.
Greenko expects to benefit as India’s renewable market opens up due to rapid industrial decarbonization. Currently, India’s renewable energy market is dominated by state-run power utilities as the government has ordered them to buy a certain percentage of clean electricity. To spur industrial carbon reduction efforts, India’s power ministry has changed rules to allow large power consumers to buy green electricity directly from a supplier of their choice without having to pay heavy charges to the state distribution utilities.
Source: indianexpress.com
