Cement firms to invest ₹13,000 crore in green energy capacity by FY28

India’s major cement companies are likely to increase their clean energy capacity to 6 gigawatts (GW) by March 2028 from around 4 GW at the end of March 2026, supported by planned investments of Rs 13,000 crore over the next two years, ratings agency ICRA said on Thursday.

The additional capacity is likely to generate annual savings in the range of Rs 6,200 crore to Rs 6,700 crore, implying an attractive payback period of 1.8 to 2.2 years. Cement is an emission-intensive industry and major cement producers have laid out net-zero emission roadmaps over the next 15-20 years.

The calcination process accounts for 57-60 per cent of total emissions, while fuel combustion and electricity consumption account for 27-30 per cent and 10-13 per cent, respectively. This underscores the need for a multi-pronged decarbonisation strategy.

"The cement industry is accelerating its decarbonisation efforts through increased adoption of green power, blended cement, alternative fuels and clinker efficiency improvements. Apart from sustainability, this transition is also being driven by the need to mitigate fuel cost volatility and enhance cost competitiveness," ICRA said in a statement.

Among the various decarbonisation pathways available to cement producers, green energy remains one of the most commercially attractive options, ensuring both emission reduction and meaningful cost savings, according to Anupama Reddy, vice-president and group head, corporate ratings, at ICRA.

"Every 5 per cent increase in green power replacement can lower power and fuel costs by Rs 15-16 per tonne. Consequently, a 25 per cent replacement level could translate into cost savings of Rs 75-80 per tonne and support an operating margin expansion of 140-160 basis points,” she added.

The cement industry is also evaluating advanced technologies such as carbon capture, utilisation and storage (CCUS). The government has proposed an outlay of Rs 20,000 crore over five years to support CCUS deployment across key sectors, including cement.

However, large-scale commercial adoption is likely to remain gradual due to high implementation costs, significant energy requirements for carbon capture and processing, and limited carbon dioxide transportation and storage infrastructure.

According to Reddy, blended cement remains an important lever for reducing emissions, although its adoption is expected to increase gradually due to application-specific requirements and customer preferences.

"At the same time, India's thermal substitution rate (TSR) of around 6 per cent remains significantly below global benchmarks, indicating substantial headroom for greater use of alternative fuels such as biomass, municipal waste and industrial waste," she said.

Major cement companies are targeting TSR levels of 10-15 per cent over the next three to five years, which should support both a reduction in emissions and an improvement in profitability.