Credit rating agency ICRA has projected that green power will account for approximately 40-42% of the total power mix of major cement companies in India by March 2025, a significant increase from around 35% as of March 2023.

ICRA anticipates that the proportion of blended cement in the portfolios of major cement companies will rise to 80-82% in the medium term, up from 77-79% in fiscal year 2023. Moreover, these companies are actively increasing the utilization of Portland Slag Cement (PSC) within their blended cement offerings. PSC manufacturing involves a lower clinker factor due to the higher use of slag, resulting in reduced emissions.

According to Anupama Reddy, Vice President and Co-group Head at ICRA, key cement industry players in the country have set ambitious goals to reduce their emissions by 15-17% over the next 8-10 years. They aim to achieve this by increasing the utilization of blended cement, which relies on less clinker and, consequently, less fuel. They also plan to boost the use of green power, which includes solar, wind, and waste heat recovery system (WHRS) capacities.

‘The major cement companies are expected to invest approximately ₹55 billion (~$660.2 million) in green power infrastructure for the planned addition of 537 MW in the next two years. This estimate is based on an installation cost of ₹120 -130 million (~$1.4-1.5 million)/ MW for WHRS and ₹40-45 million (~$480,166-528,183) for solar projects. These investments are projected to result in annual savings of ₹20 billion (~$240 million) in power costs for these companies once their planned green power capacities become fully operational,” she said.

The growing emphasis on green power is expected to diminish the cement industry’s reliance on expensive thermal power and grid electricity, leading to cost reductions and a smaller carbon footprint.

Anupama Reddy highlighted the benefits of green power, saying, ‘Assuming a thermal power cost at ₹6.5 (~$0.078)/kWh, WHRS power cost at ₹0.75 (~$0.009)/ kWh, and solar power cost at ₹4.5 (~$0.054)/KWh, a 25% replacement of thermal power consumption with green power could yield cost savings of approximately 15-18% and improve operating margins by 140-160 basis points for cement companies, all while contributing to a reduced carbon footprint.'”

The cement industry is known to consume high levels of energy and ranks among the largest coal consumers, second only to sectors like iron, steel, and thermal power. Historically, cement companies have drawn electricity from the state grid and relied on coal-based captive thermal power plants. Cement manufacturing processes entail significant coal usage during clinker production, leading to greenhouse gas emissions that harm the environment.

The extent of emissions is influenced by various factors, including the clinker factor, power consumption per tonne of cement, the thermal substitution rate, and the incorporation of green power in a company’s energy mix.

According to Masdar, decarbonization budgets for hard-to-abate sectors like cement are a significant concern, with less than a third of executives from these industries saying they have adequate budgets to finance their decarbonization efforts.

BloombergNEF report said investments in the low-carbon energy transition accounted for a record-breaking $1.1 trillion in 2022 and had reached parity with capital deployed for fossil fuel supply.