Narayana Health, a multi-specialty hospital, heart center, and primary care facility chain with a presence across 18 cities in India, has saved over ₹40 million (~$482,946) in 2021 by adopting renewable energy to power most of its operations in India.

The commercial and Industrial (C&I) segment in India has seen a rapid increase in renewables adoption to save on energy costs as well as to deliver on sustainability targets.

According to Mercom India’s Solar Open Access Market Report Q3 2022, India installed around 1.9 GW of open access solar capacity in the first nine months of the calendar year 2022, an increase of 96% year-over-year, with a majority of projects set up for units in the C&I segment.

Mercom India spoke to Ashok Kumar, ESG Manager at Narayana Health, to understand the various benefits the hospital chain has experienced since it transitioned to renewable energy.

What benefits have you seen after adopting renewable energy?

We at Narayana Health group operate over 39 specialty hospitals, heart centers, and clinics across India. Our overall renewable energy consumption is around 32%, which includes 21% from solar, 8% from hydropower, and 2% from wind. We have switched to renewables at four of our locations. One of them is for the specialty hospital in Jammu where we use hydropower; the second one is in Mysore, where the energy is also supplied by a hydropower project. At our Bangalore facilities in the Health City premises, we use solar for 80% of our energy needs, and around 5 to 10% is supported by wind energy. In the absence of either, we consume energy generated from the hydropower project. So far, the group has been able to save approximately ₹35-₹40 million (~$422,580 – $482,946) annually so far. We plan to add to increase our renewable energy consumption in the coming year, which would add another 1% of savings to the total amount.

What challenges did Narayana Health face when switching to renewables?

The decision-making part was the easier one as the savings were evident, plus we have the ESG fulfillment and climate emergency requirements set for the group. Our buildings lack the rooftop space to set up systems for consumption, so we are dependent on procuring power from solar or wind parks. Certain states in India discourage acquiring power through open access due to various reasons. Also, there is a scarcity of investors and developers in most of the states, due to which the state governments also don’t encourage renewable energy project development. Most businessmen go for higher and faster profitability, overlooking investments in renewables. If the private equity funds, along with financial institutions and private renewable project developers work hand in hand with the state governments, it will make transitioning to clean energy much easier for a lot of C&I consumers in India.

What should consumers keep in mind when making the switch to renewables?

Renewable energy is the only option for organizations to source low-cost power, as government tariffs are always increasing. Depending on the investment preference, they can choose from different models. There are CAPEX and OPEX models – CAPEX is where the organizations have enough capital to invest in one go and earn more savings in the long term. Companies who don’t wish to invest a huge amount upfront can opt for the OPEX model, where the power will be supplied at a unit rate, providing savings on monthly power bills.

The OPEX model varies from state to state, and consumers are usually charged additional open access charges. For CAPEX, consumers can opt to invest 100% equity, or the minimum required 26% depending on the capital available, which helps them save on the wheeling and cross-subsidy charges. Generally, organizations opt for the 26 to 30% minimum equity investment, and the remaining is added by the project developers. CAPEX savings can range from 20 to 40% and OPEX 20%.

What motivated Narayana Health to switch to renewables?

We are a group of hospitals with multiple specializations, which require a constant supply of electricity to operate various equipment. We had to optimize our costs first, energy costs being the major contributor to it so that we could continue to offer affordable healthcare. This was the biggest motivator for us to switch to renewables. With energy costs going down, overall costs for the group have also seen a decline. This has also helped to maintain our costs in the face of untimely inflation. By adopting renewable energy for our operations, we also voluntarily support the DISCOMs in the state we operate in, to meet their renewable energy compliances. Also, the encouraging regulations in the states have helped in ensuring a smooth transition.

Starting in 2022, Mercom India has been hosting the C&I Clean Energy Meet Series, which brings the C&I entities across major cities in India face-to-face with industry experts to discuss renewable energy adoption and related energy savings.