Key Takeaways
➢ Sample of 30 out of top 200 companies in India show that Renewable Energy (RE) consumption has grown modestly from 2.4% to 3.4 of total energy consumption.
➢ The average share of renewable energy in consumer staples, IT and real estate grew from 42% in FY21 to 73% in FY23 collectively. The average share of energy intensive sectors like materials and utilities remains at less than 6% and 0.5% respectively.
➢ Consumer Staples turn out to be transitioning the fastest with an 81% average RE share followed by Information Technology at 53%. The rate of transition, however, is highest in the Real Estate sector.
➢ Operational expansion of Industrials is driven by fossil fuel: has led to an increase in total energy consumption but reduction in relative RE consumption.
➢ Operational expansion in the Services sector supported by renewable energy. Dr. Reddy Laboratories striding towards energy efficiency as well as transition.
➢ State Bank of India drives the fall in average RE share in financial sector as it reduces its RE share by 10 percentage points.
Sample of 30 out of top 200 companies in India show that RE consumption has grown modestly from 2.4% to 3.4% of total energy consumption.
30 out of top 200 companies that have disclosed renewable energy usage were examined. These companies cumulatively represent approximately 6.19% of India’s overall energy consumption.
Majority of the companies in the sample have 0-20% share of RE. There has been a significant enhancement of renewables in the energy mix by Consumer Staples, Information Technology and Real Estate. The average share of renewable energy for these sectors grew from 42% in FY21 to 73% in FY23 collectively. However, total average renewable energy across multiple sectors shows only a modest change from 2.4% to 3.4% in FY21 to FY23 due to the energy intensive sectors. The average share of energy intensive sectors like materials and utilities remains at less than 6% and 0.5% respectively because of the challenges in electrification of production process.
Operational expansion of Industrials mainly driven by fossil fuel
Total energy consumption for three companies in industrials (Adani Ports and Special Economic Zone Ltd., Bharat Forge Ltd., Larsen & Toubro Ltd.) increased by 8-12% on y-o-y basis in FY23. At the same time, a reduction in RE of approximately 15% is observed. This implies that expansion of operation activities in the industrial sector is driven by fossil fuels. Cummins India Ltd., an exception in this sector, has increased its renewable energy consumption by 47% against an increase of 16% in total energy consumption thus improving its energy mix.
Service sector operational expansion supported by renewable energy
Companies with low energy intensity are increasing RE proportionately to their total energy demands indicating technological advancements. Companies in healthcare (Dr. Reddy Laboratories Ltd.) and IT (Tata Consultancy Services Ltd.) are not only rapidly transitioning to renewable energy but have also reduced their overall energy demand. This may imply advancements in energy efficiency coupled with the low energy-intensive nature of operations.
State Bank of India (financials) and Lupin Limited (Healthcare) stand as anomalies. These companies have reduced their total energy demand, but a decline of 10.3 and 4.8 percentage points in RE share is also observed. Given an increase in their operating income and net worth (y-o-y) scaling down of operations doesn’t seem a likely reason.
Lackluster participation of low turnover companies in the energy intensive sector
Except Dalmia Bharat Limited and JSW Steel Ltd., companies belonging to industrials, materials, and utilities with below Rs. 260 billion (26,000 crore) turnover increased RE consumption however, the incremental change of RE in proportion to total energy consumption remains very low.
Ultratech Cement Ltd., being the second largest consumer of energy in this sample, has reduced its renewable energy consumption by 1,500,000 GJ approximately.
Consumer Staples turn out to be transitioning the fastest with an 81% average RE share followed by Information Technology at 53%. Hindustan Unilever Limited and Wipro Limited respectively take the top position. The rate of transition, however, is highest in the Real Estate sector. The financial sector reduced its RE share by 10.7 percentage points.
The 30 companies selected for the analysis have shared RE mix
For this analysis, companies that shared energy related commitments from the top 200 listed companies in India (as per market capitalization in 2023) were selected. These commitments can be related to RE capacity for operations, specific energy consumption reduction, energy mix or efficiency. To study the trend of RE penetration, data for energy and turnover were collected from companies’ BRSR and annual reports from FY21 to FY23.
The methodology considers RE penetration (or share) as a percentage of renewable energy in total energy consumption. The trend is captured as percentage change from FY21 to FY23 and averages are weighted according to total energy consumption.
