India’s small steelmakers could save money and cut emissions with switch to renewable power
Top line
Transitioning to renewable energy could reduce electricity costs by up to 34% and lower carbon emissions for India's smaller steel producers, though infrastructural and regulatory hurdles remain.
Summary
A recent report reveals that India's smaller steel companies, which account for nearly 40% of the nation's crude steel production, could reduce their electricity bills by up to 34% and significantly cut carbon emissions by transitioning to renewable energy. With electricity representing up to 40% of operating costs, shifting to clean power offers financial relief alongside environmental benefits. Although only about 11% of small steelmakers currently use renewables due to high capital costs, regulatory red tape, and grid infrastructure limitations, experts recommend a cluster-based joint-investment model to overcome these barriers and support India's 2070 net-zero climate goals.
Highlights
- Smaller steel companies in India account for nearly 40% of the country's crude steel production.
- A report titled 'Powering India’s Secondary Steel Transition' indicates that switching to renewable energy could reduce annual electricity costs by about 22 million to 24 million rupees ($250,000 to $275,000) per unit, or up to 34%.
- The report was produced by a consortium including the Confederation of Indian Industry, WWF-India, Climate Catalyst, and JMK Research.
- Electricity makes up to 40% of operating costs for small steel producers, with profit margins further strained by fuel costs linked to the Iran war.
- The steel sector accounts for roughly 12% of India's annual greenhouse gas emissions, and decarbonizing it is vital for achieving net-zero emissions by 2070.
- Adopting clean power can also protect Indian steel companies from new European carbon taxes.
- The report suggests a cluster-based, joint-investment approach to lower upfront financial burdens and make renewable energy projects commercially viable for small steelmakers.
- Only about 11% of smaller steelmakers currently use renewable power, compared to roughly 22% of India's overall electricity mix.
- Barriers slowing the clean power transition include high capital costs, government regulations, low awareness, and inadequate grid infrastructure in certain regions like Gujarat.
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