NEWS

Key Takeaways

• Ember’s projections show India’s heavy industries can use 20 GW of open access solar to lower costs and emissions  

• Sourcing 50% renewable energy for their operations is already affordable, but costs go up with higher penetration  

• Policy support is required to maximize renewable energy adoption in heavy industries 

India’s steel, cement, and aluminum industries can tap into the 20 GW open access solar market to reduce their electricity costs, decarbonize operations, and achieve carbon neutrality. This transition to renewable energy is what the UK-based think tank Ember calls a million-dollar cost-saving opportunity. 

The country’s open access scheme allows commercial and industrial (C&I) consumers to source renewable energy from distant locations via existing grid infrastructure. At present, Indian industries are mandated to replace over 40% of captive power with renewables by 2030.  

Ember analysts see the steel sector as presenting the largest opportunity at 9.4 GW since it has a greater reliance on expensive grid power, which Ember analysts think can be replaced with open access solar. Cement and aluminum together represent an 11 GW market.  

The 20 GW solar opportunity could potentially help these industries eliminate 29 million tons of emissions annually, thus contributing to their carbon neutrality aims, despite their current dependence on low-cost captive coal power.  

Its use can also lower operational costs for steel and cement plants across most states. For instance, steel plants can save up to 10% by operating standalone electric arc furnaces (EAF) with solar power. For direct reduced iron-arc furnace (DRI-EAF), savings range between 2% and 5%.  

Nearly 40% of the 20 GW open access solar power opportunity for heavy industries is concentrated in the industrial states of Odisha and Chhattisgarh, known for their steel and aluminum production, according to the Ember report. Here, open access solar/renewable energy is a commercially viable sourcing option for these industries, stress the writers.

For India’s heavy industries, increasing renewable energy consumption from 50% to 80% and further up will involve a cost increase as this would bring in the role of energy storage, according to Ember. (Photo Credit: Ember)

“This shift has the potential to transform these regions into green manufacturing hubs, attracting international climate finance and corporate investments,” reads the report titled RE-powering India’s heavy industries: 20 GW today, 24/7 tomorrow.  

Discussing the financial viability of renewable integration suggested, Ember’s Energy Analyst for Asia, Duttatreya Das, explained that heavy industries in India can already source 50% renewable energy affordably. Increasing this share to 80% can raise the costs moderately by up to 1.4x the cost of plain vanilla renewable energy generation. This is because it would mean investing in storage and the challenge of managing surplus generation. 

Ember’s modeling shows that increasing renewable energy penetration to 90% will raise costs to around 1.6x the cost of renewable energy generation. At this stage, the system will become increasingly reliant on battery storage, which will come at a cost premium.  

Currently, operating on 24x7 renewable energy is not financially feasible since it could cost between INR 8.00 and INR 11.00/unit, which will be about 3.5x more than vanilla renewable energy generation, according to Ember’s projections. Batteries will likely cost 60% of the total cost in this scenario.  

Nevertheless, heavy industries can benefit significantly from switching to renewable energy for their use, stresses the report.  

In 2024, 6.9 GW of solar open access capacity came online in India for C&I consumers, representing 77% annual increase. This was driven by the cost advantage of renewable energy and regulatory support, but more is required.   

“India's industrial sector, one of the hardest to decarbonise, has significant financial incentives to transition through renewable-based electrification. However, policy and institutional barriers must be dismantled to maximise this shift,” said Sustainable Finance Consultant Labanya Prakash Jena of the Institute for Energy Economics and Financial Analysis (IEEFA), who contributed to the report.  

The Ember report is available for free download on its website.  

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