India’s Smaller Steel Producers Could Slash Power Costs, Emissions Through Renewable Energy Shift

Small steel manufacturers in India, which collectively produce nearly 40% of the nation’s crude steel output, stand to reduce their annual electricity expenses by approximately 22 million to 24 million rupees ($250,000 to $275,000) per facility—roughly a third of current bills—by transitioning to renewable energy sources, a report released Wednesday found. The analysis, titled “Powering India’s Secondary Steel Transition,” was prepared jointly by the Confederation of Indian Industry, WWF-India, Climate Catalyst and JMK Research.

Power costs consume up to 40% of operating expenses for many smaller steel producers, making them a critical concern as the sector grapples with rising fuel costs stemming from regional conflicts. Steel production accounts for approximately 12% of India’s annual greenhouse gas emissions, positioning the industry as a major decarbonization target as the country pursues net-zero emissions by 2070. Transitioning to renewable electricity could also shield Indian steelmakers from European carbon border taxes implemented at the start of 2024.

The report identifies collective investment in renewable energy projects as the most viable approach for smaller steelmakers, allowing companies to jointly own and operate facilities while distributing financial risk. This cluster-based model creates projects large enough to attract commercial financing while reducing the individual capital burden on participating companies, the analysis noted. Currently, only about 11% of smaller Indian steelmakers use renewable power, compared with roughly 22% of the nation’s overall electricity generation.

Despite India’s clean energy capacity tripling over the past decade, smaller producers face persistent obstacles including high upfront costs, regulatory complexity and limited government support in some regions. Steel company owners in Gujarat reported that inadequate transmission infrastructure forces them to curtail solar production by as much as 80% at certain times, while manufacturers in Chhattisgarh cite prohibitively expensive capital costs. Industry leaders called for improved government infrastructure investment and greater coordination among officials to streamline the transition to clean power.