Major cement producers are stepping up investments in renewable energy as rising green power adoption emerges as both a decarbonisation strategy and a cost-saving lever.
India’s major cement companies are expected to take their green power capacity to 5.8-6.0 GW by March 2028, up from around 4.0 GW in March 2026, as producers accelerate investments in renewable energy to lower power costs and reduce emissions.
According to rating agency ICRA, cement companies are likely to invest around ₹12,000-13,000 crore over the next two years to add the planned capacity. The investment is expected to generate annual savings of approximately Rs. 6,200-6,700 crore, translating into an estimated payback period of just 1.8-2.2 years.
The economics are particularly significant for the cement industry, where energy is a major component of production costs and profitability remains exposed to fluctuations in fuel and power prices.
“The highly energy-intensive nature of cement manufacturing, coupled with persistent fuel price volatility and supply-side risks, is driving the sector’s transition towards green power,” said Anupama Reddy, Vice President and Group Head, Corporate Ratings, ICRA. She noted that among the various decarbonisation routes available to cement producers, green energy has emerged as one of the more commercially attractive options because it can deliver both emissions reduction and cost savings.
Green power emerges as a margin lever
For cement producers, the transition is not simply about meeting long-term emissions targets. Increasing the share of renewable power in the energy mix can also have a direct impact on operating costs.
ICRA estimates that every 5% increase in green power replacement can reduce power and fuel costs by Rs. 15-16 per tonne. At a 25% replacement level, this could translate into savings of Rs. 75-80 per tonne and potentially expand operating margins by 140-160 basis points, according to the agency.
“The highly energy-intensive nature of cement manufacturing, coupled with persistent fuel price volatility and supply-side risks, is driving the sector’s transition towards green power,” Reddy said, adding that the economics of renewable energy make it an increasingly attractive option for cement manufacturers.
The combination of lower energy costs and a relatively short investment payback is likely to support further spending on captive renewable generation and other green power arrangements as companies seek to increase the proportion of renewable energy in their overall consumption.
Decarbonisation pressure remains high
The push comes against the backdrop of cement’s high carbon intensity. Major cement producers in India have already established net-zero emission roadmaps extending over the next 15-20 years, making energy transition an increasingly important part of their capital allocation and operating strategies.
ICRA estimates that the calcination process contributes 57-60% of total emissions from cement production. Fuel combustion accounts for another 27-30%, while electricity consumption contributes 10-13%.
This emissions profile means that renewable power can address only one part of the industry's carbon footprint, but it remains an important and relatively immediate lever, particularly because it can be deployed alongside other efficiency and decarbonisation measures.
ICRA therefore expects the industry’s approach to remain multi-pronged, with companies increasing their use of green power, blended cement, alternative fuels and clinker-efficiency improvements.
