State run-Bharat Petroleum Corporation Ltd (BPCL) is setting aside Rs 25,000 crore to build a robust renewable energy portfolio by 2040 and is putting in place a team to push the diversification, which will be strategic to the company’s ambition to be “net zero” on emissions by the year.
Even as the public sector oil marketing company is in the process of privatisation, BPCL aims to build 10 gigawatts (GW) of renewable energy capacity by 2040 through organic and inorganic routes. The company currently has a capacity of 45 megawatts (MW).
Oil companies across the world have been investing heavily in renewable energy, like wind and solar power, as they chart a transition towards cleaner energy sources.
The global commitment towards cutting emissions and acting to curb the impact of climate change has pushed conventional energy majors like BP Plc., Chevron Corp., Royal Dutch Shell Plc., TotalEnergies SE, Eni SpA and Exxon Mobil Corp., among others, to pump in billions into clean energy projects over the years. The fact that investors are aligning their portfolios to net zero has added momentum to energy transition.
Offsetting emissions
“We at BPCL are committed to Scope 1 and 2 and aim to be net zero by 2040. This strategic business unit is a part of it. We are seeing a shift from fossil fuels to renewable. India would be among the countries which will continue to grow in fossil fuels, but we understand that it has to eventually move to clean energy,” Amit Garg, executive director, renewable energy, BPCL, told Moneycontrol in an interview.
BPCL has committed to offset emissions from its crude oil refining operations and from the energy it uses by 2040, referred to as Scope 1 and 2 emissions.
Garg’s immediate mandate is to build a portfolio of one gigawatt, driven primarily by solar power, by 2025 with an investment of Rs 5,000 crore. In financial year 2022-23 alone, BPCL plans to invest Rs 2,000 crore and close some acquisition deals.
“In the coming years, with scale and technology, per megawatt prices will come down. There's already been a lot of improvement and now expectation is that it may not decrease drastically but still there is some scope. Overall we plan to invest around Rs 25,000 crore in this business for 10 GW,” Garg said.
To hit the ground running
While BPCL has been investing on clean fuel, building green refineries, improving efficiency and reducing its carbon footprint, its renewable energy play comes a little late as conglomerates like the Adani Group and Tata group have already built considerable capacity.
The sector has also seen independent power producers like ReNew Power Pvt. Ltd and Azure Power Global Ltd add scale. BPCL now wants to hit the grown running and is scouting for acquisition opportunities to give the company an initial push in the sector.
“We have been looking at some solar assets in the last few months and due diligence is on; definitely we are working in that area in a big way,” Garg said.
How does BPCL plan to compete with established players in the highly competitive renewable energy sector?
“We are known for our pace of decision making and the quality of the decision. We are far superior to many other peers. This is not the first time we will be bidding for the projects and will have to make quick decisions. We deal with the industrial and commercial customers so all these systems are already in place. We already have experience and we would also have domain experts helping us,” Garg said.
At the recently held COP (Conference of the Parties) 26 summit in Glasgow, Prime Minister Narendra Modi said India would aim to build 500 GW of renewable energy; half of its energy mix would come from non-fossil fuel sources by 2030.
India currently has an installed renewable energy capacity of over 100 GW.
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