Cement companies are increasing green energy investments to lower power costs, reduce emissions and protect margins from fuel price volatility. The sector’s green capacity is expected to rise significantly over the next two years as companies pursue larger shares of renewable power in their energy mix.

UltraTech Cement aims to raise its green energy share to 85 per cent by FY30 from 35.8 per cent in FY26. It has become the first cement company in India to exceed 2 GW of green energy capacity for captive use. Ambuja Cements is targeting a 60 per cent share by FY28, while J K Cement aims for around 75 per cent by FY30. Shree Cement has reached around 65.2 per cent.

Power and fuel account for around 25 to 35 per cent of cement manufacturing costs. Analysts said renewable energy investments, initially driven by emissions reduction goals, are increasingly being supported by falling generation costs and the potential to improve earnings before interest, taxes, depreciation and amortisation per tonne.

Icra estimates that replacing 25 per cent of conventional power with green energy could save Rs. 75 to 80 per tonne. It expects green power capacity among major cement companies to increase to 5.8 to 6 GW by March 2028 from around 4 GW in March 2026. Investments of Rs. 120 to 130 bn over two years could generate annual savings of Rs. 62 to 67 bn, with a payback period of 1.8 to 2.2 years.

The group captive model is enabling companies to access renewable power with lower upfront equity requirements. Under the Green Open Access Rules, companies can qualify for group captive status by investing at least 26 per cent equity in a renewable project and consuming 51 per cent of its power. Adani Cement is instead setting up around 1 GW of solar and wind capacity independently, investing about Rs. 50 to 60 bn. Analysts expect hybrid ownership and power purchase arrangements to become more common, while green financing through sustainability-linked bonds and loans is also gaining importance.