India’s leading cement companies are set to raise their green power capacity by nearly 50% to 5.8-6 GW by March 2028, from around 4 GW in March 2026, backed by planned investments of ₹12,000-13,000 crore over the next two years.
The additional capacity could generate annual savings of ₹6,200-6,700 crore, translating into a payback period of just 1.8-2.2 years, as cement makers increasingly turn to renewable power to lower energy costs and reduce exposure to fuel-price volatility.
Every 5% increase in green power replacement can reduce power and fuel costs by ₹15-16 per tonne, while a 25% replacement could lower costs by ₹75-80 per tonne and expand operating margins by 140-160 basis points, according to Icra.
“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.
Icra’s sample comprises UltraTech Cement, Shree Cement, ACC, Ambuja Cements, Birla Corporation, Dalmia Bharat and Ramco Cements, which together account for around 65% of India’s installed cement capacity as of March 2026.
Green power capacity among these companies has already climbed sharply from 1.2 GW in March 2023 to 4 GW in March 2026, and is projected to reach 5.8-6 GW by March 2028, the Icra data showed.
The shift comes as cement producers target net-zero emissions over the next 15-20 years.
The calcination process accounts for 57-60% of cement-sector emissions, while fuel combustion contributes 27-30% and electricity use another 10-13%. Companies are therefore combining green power with blended cement, alternative fuels and improvements in clinker efficiency.
Icra said India’s thermal substitution rate is currently only around 6%, significantly below global benchmarks. Major cement producers are targeting 10-15% over the next three to five years by increasing the use of biomass, municipal waste and industrial waste as alternative fuels.
The industry is also evaluating carbon capture, utilisation and storage. The government has proposed ₹20,000 crore over five years for deployment across sectors including cement, though ICRA expects large-scale adoption to remain gradual because of high costs, energy requirements and limited carbon transportation and storage infrastructure.
Source- The Financial Express
