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How Electricity Distribution Companies In India Can Work With Commercial And Industrial Consumers For Renewable Energy Procurement

As a result of a multitude of factors, such as national and international commitments to Renewable Energy (RE), falling RE prices, government regulation promoting RE, and the advent of sustainability targets, Commercial and Industrial (C&I) consumers all over the world have begun to actively explore the possibility of increasing the share of RE in their power mix. This presents two opportunities: one, an opportunity for C&I consumers to drive the demand for RE products, and two, a unique opportunity for utilities to market new RE products to C&I consumers. This is a topic that merits deeper analysis in the Indian context.

Key Findings

Executive Summary

  1. Commercial and Industrial (C&I) consumers worldwide are proactively, voluntarily, and consciously attempting to increase their share of renewable energy (RE) consumption. This is a result of internal pressures (for example, from shareholders) as well as external factors such as government policies that mandate them to procure RE, increasing grid tariffs, and so on.

  2. This has resulted in companies worldwide entering into specific agreements with utilities for “green tariffs,” which are based on long-term contracting between utilities, corporate consumers, and RE producers.

  3. The uptake of green tariffs has seen a reasonable degree of success in countries such as the United States of America, even though these products may typically require the buyer to pay a premium for the guaranteed procurement of RE.

  4. Now is a strategic time to explore the possibility of using green tariffs for Indian corporate consumers, in view of their potential benefits for electricity distribution companies (discoms, as these utilities are termed in India).

  5. Green tariffs in India must be informed, on the one hand, by the principles adopted for the formulation of successful green tariffs worldwide, and on the other hand, by the nuances of the regulatory framework governing the electricity sector in India, such as cross-subsidization of agricultural and residential consumers by C&I consumers.

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