PSUs- the Pathway for India’s Clean Energy Goals to Net Zero By 2070

SELCO & IKEA Foundation Usher Solar Solutions For 25,000 Healthcare Facilities

Coal India Limited (CIL), NTPC, and Indian Railways- three of India’s largest central state-owned enterprises, can help the nation achieve its climate goals, while also capturing a portion of the clean energy goals / market and reducing an anticipated 22%-28% cash flow gap by 2050 as India moves towards net-zero, according to a new report by the International Institute for Sustainable Development (IISD).

The study entitled, ‘India’s State-Owned Enterprises in Energy from 2020-2050: Identifying Evidence-Based Diversification Strategies’, uses public sector undertakings (PSUs) in the coal sector to demonstrate how energy businesses can recognise their future uncertainties while also recognising opportunities in the evolving energy system.

Balasubramanian Viswanathan, a policy advisor at IISD and a co-author of the paper, argues that state-owned firms can contribute to India’s transition to sustainable energy while still generating income for the government, boosting local economies, and creating jobs. The “pathways for how this can be done” are demonstrated by evidence-based methodology.

According to the report, NTPC’s cash flow might decrease by Rs. 404 billion (22%) while CIL’s cash flow could decrease by Rs. 415 billion (28%) under the net-zero-aligned pathway between 2020 and 2050 as compared to a business-as-usual scenario.

However, the report’s authors contend that by taking a few specific actions to diversify their businesses over the coming few years, these companies—as well as other comparable PSUs in India—can minimize unpredictability and revenue shortfalls in the future.

Diversification

The report concludes that PSUs must generate internal estimations of the financial impact of the changing energy landscape and net-zero roadmaps with interim targets for the firm, which can serve as a guide for future decisions. They can use their capacity to raise money at advantageous rates to figure out diversification plans and advance the adoption of renewable energy technologies. The experts advise that in order to do this, businesses should set clean energy targets that are commensurate with the potential scope and pace of the financial repercussions and periodically raise the bar on these targets.

Additionally, creating strategic alliances between PSUs to share knowledge and funding R&D can assist PSUs in developing internal expertise in cutting-edge sustainable energy technology. Making their goals for a clean energy transition known to the public can further boost the preceding actions by sending encouraging market signals.

According to Viswanathan, “PSUs are crucial actors in achieving India’s climate and energy targets as they are large employers in the conventional energy sector, and they should involve other relevant stakeholders in the decision-making process.”

The report’s authors recommend that all state-owned energy companies use this method to create thorough internal evaluations and an evidence-based transition plan for the clean energy industry.

At SaurEnergy, we have repeatedly highlighted the critical role of PSU’s, thanks to their dominance of the energy sector in India. However, the face complex challenges on the  ground, especially when it comes to replacing coal for instance, thanks to the multiple stakeholders involved, from workers, to the railways that makes super normal profits on transportation, to even the taxes the government, at both central and state level collect from mining.