Infosys Green Power Progress Slowed by State Rules: Q&A

By Vandana Gombar, BloombergNEF. This interview first appeared on the Bloomberg Terminal

Infosys, one of the largest exporters of software services from India, will be 100% powered by renewable energy by 2020, two years later than the originally proposed 2018. It also plans to be carbon-neutral in the same timeframe.

The date was revised “primarily because we have a challenge in…the renewables transition,” Bose Varghese, head of green initiatives for the company, said in an interview at his office in Bangalore.

The company, with about 218,000 employees and annual revenues of $11 billion, has faced policy barriers in expanding its renewables basket in some states. Even states that have been traditionally friendly to renewable energy, such as Karnataka, have occasionally taken steps to take away the savings that renewable power can generate.

About 45% of the power consumed by the company at its facilities and data centers last year was sourced from renewables: onsite solar rooftops, onsite ground-mount solar, offsite ground-mount solar and purchased green power. The target for this year is 55%.

What works better: building up renewable energy plants or buying green power? According to Varghese, as the process of signing power purchase agreements with renewable energy sellers becomes more consumer-friendly, it would probably be easier to buy than build. “Both the baskets will remain open. We will put in our money and build our own plants, and we will also buy power,” Varghese said. In the last financial year, about a fifth of the renewable energy consumed came from captive capacity, while the rest was procured.

Q: Are the drivers for renewable energy use at Infosys today different from what they were a few years ago, given that the cost dynamics have changed so much?

Not really. Back in 2011, when Kris Gopalakrishnan was our chief executive, he made three commitments:

1. Infosys will be carbon-neutral
2. We will transition to 100% renewable energy
3. We will improve per capita energy efficiency by 50%

So when the RE100campaign was launched globally, we were among the first ones to sign (in 2014) because we were already on the renewable energy path. Our renewable energy and efficiency goals feed into carbon neutrality. Cost was not the driver for us, though it has made the transition easier.

Q: How does Infosys define carbon neutrality?

We look at all the carbon (greenhouse gas emissions) that are directly or indirectly related to our business operations, and try to make it net zero. We take into account scope 1 (from direct use of fuel, such as diesel or other), scope 2 (indirect emissions from purchased energy) and scope 3 (all other emissions, including business travel). Many large companies restrict themselves to scope 1 and 2.

Q: When do you become carbon-neutral?

Initially, we had committed for financial year 2018. Last year, we revised that to 2020 primarily because we have a challenge in scope 2, or the renewables transition. We have made significant progress, with almost 45%, of power coming through renewables, but there are a lot of challenges. On energy efficiency, we are doing extremely well, having gone beyond our committed 50% mark.We plan to offset emissions that are not avoided. We are running a large portfolio of community-based offset projects, mostly in the clean cooking space. They are fully funded by us. Under this portfolio, we have provided high-efficiency cook stoves or biogas units to nearly 100,000 rural families. Together, they will generate offsets of nearly 130,000 tCO2e every year.

Q: What is the main challenge in expanding the renewables basket?

A lot of decisions regarding power procurement and delivery are left with state governments. Even when some policies are enabled through federal legislation, they don’t necessarily translate into viable options on the ground. Open access –which enables buying of power from a seller other than the state distribution company –is provided for in the Electricity Act of 2003, but there aren’t many states where you can actually practically getthat.

Q: Was the challenging policy environment the main reason for pushing the RE100 target date to 2020 from 2018 earlier?

A: Yes. Our target for renewables share this year is 55%. This includes onsite rooftops, onsite ground-mount, offsite ground-mount, and purchased green power. Based on our requirement, rooftop solar is like a drop in the ocean, but that is an opportunity available and we are keen to maximize it. Currently, we have 9.8 megawatts of rooftops. We also have onsite on-ground installations: a 30-megawatt solar plant just started functioning in Karnataka, and we have a 6.6-megawatt plant on the Hyderabad campus. Our total installed capacity currently is over 46 megawatts. In addition, we procure green power through PPAs [power purchase agreements] in the states of Tamil Nadu, Maharashtra and in Karnataka too. As we expand our own power capacity, we will wind down the green PPAs. Eventually, we want to transition to 100% RE, powering all our data centers and offices by renewable energy.

Q: Procured [renewable] power is unlikely to be as competitive as captive power?

The price points are different. We look at various technologies, and do not always go for the cheapest. We will be using bifacial [solar] panels soon, for instance. The PPA prices are more or less in the region of what power companies offer. Many statesadd cross-subsidy and other charges on procured power.

Q: There was a 175-megawatt renewables installation target set by Infosys some years ago. Is that still your target?

That was the earliest estimate for solar power installations required if we were to meet all our energy consumption. It was a theoretical estimate translating power required to installed capacity. We are not going to rely completely on our own installed capacities. As PPAs become more consumer friendly at some point in the future, that probably would be an easier way to go. We will put in our money and build our own plants, and we will also buy power. Both the baskets will remain open. In financial year 2018, out of the total 110 million units of renewable power, 23 million units camefrom captive capacity and the rest through PPAs.

Q: You did look at some wind projects too?

We have looked at it. It is an option available. Although we do not have any captive wind capacity, a significant part of our procured renewable power is from wind.

Q: After your near-term goals are met by 2020, are you already thinking about the next big targets to set?

The game is never over for us –it is an ongoing job. We keep growing –more people, more office space, more data centers. We already serve clients in 45 countries. If we double our revenue, typically all this will more or less double. Even technology keeps changing: maybe tomorrow fuel cell technology will become more attractive and accessible. Through all of these, we will strive to remaincarbon-neutral.

Q: Are you also thinking of committing to higher usage of electric cars, by signing on to EV100?

We looked at it. Right now, this is not something that we can singularly drive. There should be some options available in the marketplace for us to move in that direction. It doesn’t mean that we are not trying to increase the use of EVs. In our Bangalore campus, about 100 trips are being run every night through EV service contracts. As and when EV service providers come into the market, we would like to be the first ones to move.

Q: Your thoughts on storage?

We are not looking at it at this point. I think it is not the most environmentally friendly way to manage power, nor is it financially very viable. However, without it, the whole transition to RE [renewable energy] and EVs is not possible. We hope that the storage technology will evolve into a more sustainable and economical one.

Q: Does being part of an information technology company give you an edge in the efficiency of your clean energy investments?

There are advantages of being housed in an information technology company managing data well Most of our initiatives and opportunities evolved from the capture and analysis of data. The command center –a building management system customized by us –is at the heart of our green drive.

Q: How do you view the whole debate on climate change?

If we want to meet the 2-degrees goal, then we have to move beyond the marginal play. All of us will have to really drastically change our ways. It is like if you have a conventional vehicle, you can only improve it so much; if you want zero emissions, you need an electric car running on renewable power. It is probably time for aggressive action. If you keep the target of 2 degrees in mind, science has laid out the path. You are looking at a very difficult road ahead. As a company, we are doing the best we can.

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