INDIAN CEMENT MAKERS WILL INCREASE THEIR GREEN POWER SHARE

The capital outlay towards green power investments by the major cement companies for the planned addition of 537 MW green power (solar + WHRS) is expected at around Rs. 5,500 crore in the next two years, considering per MW installation cost of Rs. 12-13 crore for WHRS and Rs 4-4.5 crore for solar plants. Such investments are likely to result in annual savings of Rs 2,000 crore in power cost for these companies once their planned green power capacities become fully operational.”

The cement industry is highly energy intensive and is one of the largest consumers of coal (as primary fuel), only behind iron, steel, and thermal power. The electricity requirements of the cement industry have traditionally been met from the state grid along with coal-based captive thermal power plants. Additionally, cement plants use significant quantities of coal during the clinkerisation process emitting greenhouse gases, which adversely impact the environment.

The extent of emission depends on multiple parameters such as the clinker factor, power consumption per tonne of cement, the thermal substitution rate and the green power mix present in the company. ICRA expects the share of blended cement in the portfolio of major cement companies to increase to 80-82% over the medium term from 77-79% in FY2023. In addition, the cement companies are looking to increase the proportion of Portland Slag Cement (PSC) in the blended cement varieties as its manufacturing involves the low clinker factor because of higher usage of slag, thus leading to lower emissions.

The increasing focus on green power is likely to lower the cement industry’s dependence on high-cost thermal power and grid for power requirements, thereby reducing the operating costs and the carbon footprint. Commenting on the benefits of green power, Ms Reddy added: “Assuming a thermal power cost at Rs 6.5 /unit, WHRS power cost at Rs 0.75 /unit and solar power cost at Rs 4.5/unit, a 25% replacement of thermal power consumption by green power could lead to cost savings of around 15-18% and an improvement in operating margins by 140-160 bps for cement companies, while also reducing the carbon footprint.