Our latest evaluation shows that switching to renewable energy is delivering major benefits for Indian businesses - boosting output while reducing carbon emissions.
India is the world's third-largest producer and consumer of electricity. Its commercial and industrial (C&I) sector - covering energy-intensive industries such as cement, metals, pharmaceuticals, and textiles - accounts for about half of the country's electricity demand. It is also a critical driver of economic growth. Decarbonising this sector is essential to India's energy transition and climate goals.
In 2021, we invested in Fourth Partner Energy (FPEL), a leading provider of renewable power solutions for C&I businesses in India. This evaluation, led by Itad and Steward Redqueen, examines how that investment supported FPEL's growth and assesses the impact of cheaper renewable power on business output and emissions.
What can we learn from the evaluation?
Using World Bank Enterprise Survey results and FPEL's operational data, the study models how much FPEL clients' electricity consumption is likely to have increased due to the cheaper cost of electricity, and how their economic output and emissions have changed as a result.
It estimates that the switch to renewable C&I power among FPEL's clients has:
- Generated $344 million ( 29.6 billion) in additional value annually for FPEL's clients, equivalent to around 3% of these businesses' total annual output.
- Avoided 3.23 million tonnes of CO emissions each year.
The scale of these benefits mean that FPEL's open access C&I renewables have an economic payback period of around five and a half years based on economic value added alone, and less than three years when carbon benefits (monetised at a shadow carbon price of USD 100 per tCO ) are included.
The study finds that FPEL's lower tariffs - averaging 30-50% below standard industrial rates - have driven the uptake in renewable energy solutions, alongside corporate commitments to reduce emissions or achieve net zero.
India's regulatory reforms since 2022 have improved project viability and investor confidence, including by enabling the sale of power across state borders and reducing interstate transmission charges. These changes have helped unlock rapid growth of India's C&I renewables sector.
BII's investment enabled FPEL to expand rapidly, moving from rooftop solar projects to large-scale open access renewables. By providing mezzanine finance at a critical juncture, BII enabled FPEL to scale its open access model and attract further institutional investment, including from IFC, Asian Development Bank, and DEG. Beyond capital, we've worked with FPEL to strengthen environmental, social, and governance systems, helping the company meet international investors' requirements and sustain its growth trajectory.
The findings underline the importance of flexible, locally tailored investment strategies and innovative finance in unlocking commercial capital. With the right enabling environment, this model can be replicated across other emerging markets.
About our sector evaluations
This study was commissioned by the Foreign, Commonwealth and Development Office (FCDO) under our FCDO-BII Evaluation and Learning Programme. It is one of several evaluations covering BII's Infrastructure sector group portfolio. Find out more.
