Opportunities and Challenges

• Steel, cement, and aluminum industries in India have a significant solar power market opportunity. • The top five producing states in India have a 20 GW solar market opportunity. • Steel presents the largest opportunity at 9.4 GW, primarily due to its greater reliance on expensive grid power. • Cement and aluminum collectively represent an 11 GW market. • Seizing this opportunity could potentially eliminate 29 million tonnes of emissions annually. Solar power offers a significant opportunity to reduce operational costs for steel and cement plants across most Indian states. In certain cases, such as standalone electric arc furnaces (EAF) for steel making, these savings can account for up to 10 per cent of operational costs. For direct reduced iron–arc furnace (DRI-EAF) based steel making, savings range between 2–5 per cent, while for cement manufacturing, the potential is lower. However, aluminum does not present a significant cost-saving opportunity due to the abundant captive coal-based generation in place. From a regional standpoint, nearly 40 per cent of the 20 GW open access solar power opportunity for heavy industries is concentrated in just two states—Odisha and Chhattisgarh, core industrial hubs for steel and aluminium production. Recent waivers on open access charges have further enhanced the appeal of renewable power in these regions, making it a commercially viable sourcing option for these industries. This shift has the potential to transform these regions into green manufacturing hubs, attracting international climate finance and corporate investments. “States such as Odisha and Chhattisgarh have long been legacy industrial hubs, owing to their proximity to rich mineral reserves. By integrating renewable power, they are well-positioned to begin their transformation to green manufacturing hubs,” said Duttatreya Das, Asia Analyst at Ember.

Challenges and Opportunities

• Achieving 24×7 RE (round-the-clock) RE generation is challenging due to the cost premium of 3.5X the cost of plain vanilla RE generation. • The transition to 24×7 RE demands massive oversizing of renewable capacity and significant battery deployment. • However, sourcing up to 50% of electricity from variable Renewable Energy (RE) is already cost-competitive for heavy industries. However, pushing beyond this threshold requires more advanced strategies,” said Neshwin Rodrigues, Senior Energy Analyst, at Ember. Cost-competitive, near-24×7 renewable energy will power the first wave of industrial decarbonisation and redefine the future of corporate power purchases. However, achieving 80% RE remains feasible, with only a moderate cost increase—about 1.4 times higher than plain solar—due to the need for energy storage and managing surplus power.

Regional Focus

• Nearly 40% of the 20 GW open access solar power opportunity for heavy industries is concentrated in just two states—Odisha and Chhattisgarh. • These states have long been legacy industrial hubs, owing to their proximity to rich mineral reserves.

Key Takeaways

• India’s heavy industries, such as steel, cement, and aluminum, can leverage solar power to reduce costs and emissions. • Cement and aluminum collectively represent an 11 GW market, and seizing this opportunity could potentially eliminate 29 million tonnes of emissions annually. • Achieving 24×7 RE (round-the-clock) RE generation is challenging, but sourcing up to 50% of electricity from variable Renewable Energy (RE) is already cost-competitive for heavy industries. • Near-24×7 renewable energy will power the first wave of industrial decarbonisation and redefine the future of corporate power purchases. In conclusion, India’s heavy industries can harness the power of solar energy to reduce costs and emissions, transforming regions into green manufacturing hubs. With advancements in renewable energy technology, the transition to 24×7 RE generation will become more cost-effective, enabling the widespread adoption of solar power for heavy industries.