India to set rules to encourage companies shift to green energy

India is making rules that will encourage companies to switch entirely to renewable power, a key step toward decarbonizing the nation’s fossil fuel-dominated economy.

The new regulations will allow companies to purchase renewable electricity from state distributors at “green tariffs,” Power Minister Raj Kumar Singh said at the virtual BloombergNEF summit on Tuesday. Hurdles for businesses seeking to buy clean power directly from generators will also be eased, he said.

Accelerating use of clean energy in offices and factories, the largest power consuming segment in the country, will be key to achieving targets to cut emissions per unit of the GDP. It will also help the companies improve their environment, social and governance — or ESG — scores by reducing their carbon footprint.

Those opting for green power will be allowed open access — when they aren’t tied down to the local distributor — within 15 days, instead of having to wait for months, Singh said. That would force state utilities to either meet the demand or risk losing their high-value customers.

Providing time-bound open access, though a “welcome move,” may be fraught with challenges, according to Debasish Mishra, a Mumbai-based partner at Deloitte Touche Tohmatsu.