Platformisation is an effective vehicle to reach the net zero goal

To support India’s transition to a net-zero future, these national oil companies will have to accelerate their efforts.

By Vikas Kaushal, Vivek Dua and Gaurav Gulati

The energy transition is high on the agenda of India’s national oil companies (NOCs), driven by the country’s climate commitments and vision for achieving sustainable growth. Most NOCs have announced ambitious plans to incorporate clean and alternate energies into their portfolios over the next one to two decades.

Collectively, these announcements signify substantial commitments. For example, the cumulative renewable energy capacity addition announced by these NOCs is over 50 GW, which constitutes about 25 percent of India’s total renewable capacity. Similar announcements have been made across other green energy sources, including more than 10 million tons per annum of green hydrogen, more than 20 billion litres of biofuels per year, and the capture of more than 100 million metric tons of CO2 through carbon capture utilization and storage (CCUS).

However, the progress toward these aspirations has been lackluster, hindered by limited bandwidth, inadequate capabilities and resources, insufficient technology collaborations, and low stakeholder participation. To meet these objectives and support India’s transition to a net-zero future, these NOCs will have to accelerate their efforts.

Platformisation be the game changer

Platformisation involves creating an autonomous entity focused solely on alternate energies, formed by one or more NOCs. With its own management, funding, and organisation, this new entity can have a razor-sharp focus on advancing the alternate energy projects with start-up-like-nimbleness without being tied to the traditional oil and gas business.

For instance, a green hydrogen platform backed by one or more NOCs as the anchor investors would benefit from the initial capital and captive demand from these NOCs, which provides it with the base load. The platform would also bring together an ecosystem of partners, including private investors, technology players, other off-takers, and financial backers such as venture funds.

Key advantages of the platform structure

* Access to the latest technologies through collaborations, including partnerships with clean-tech start-ups, promoting joint R&D, and open innovation

* Engagement with the vendor ecosystem, such as engineering, procurement, and construction (EPC) players and key equipment manufacturers, to boost execution capabilities

* An ability to operate at a large scale, leading to reduced capital and operational costs, making scaling up more competitive for both NOCs and the wider industry

* Opportunities to implement a roll-up strategy, acquiring and integrating companies to strengthen market presence

* Shared investments among NOCs, lowering individual risk exposure

Globally, similar platforms have demonstrated success through resource and expertise synergies. For instance, the Northern Lights CCUS project in Norway exemplifies a successful carbon capture platform, driven jointly by major private-sector oil and gas players along with government support. Similarly, the One Sea Initiative, a collaborative effort between major oil and gas companies in Europe, aims to develop large-scale offshore wind farms in the North Sea.

How to create platforms

Seven steps can help build a resilient and autonomous platform, which can advance the energy transition ambition of the NOCs involved in creating it:

- Establish the entity, including its organisation, operating model, and governance board.

- Set clear objectives for equity, size, target markets, and timelines.

- Build strategic partnerships with EPC players, clean-tech start-ups, and key manufacturers to boost execution and innovation.

- Secure initial funding from NOCs, strategic investors, and external sources such as product-linked incentives schemes and government grants.

- Collaborate with technology providers, investing in R&D and innovation platforms.

- Engage the market, promote offerings, and create export hubs to reach international consumers and scale up.

- Implement governance and risk management practices to support rapid growth.

By embracing platformisation, NOCs can create a resilient and innovative ecosystem, advancing India’s journey towards a sustainable and net-zero future. This strategic approach enhances technological adoption and investment attraction, positioning NOCs as leaders in renewable energy. Platformisation is thus a transformative step towards achieving national and global sustainability goals, ensuring economic growth, job creation, and a diversified energy portfolio.

(Vikas Kaushal and Vivek Dua are Partners, and Gaurav Gulati, Principal, at Kearney.)

Views are personal and do not represent the stand of this publication.