New Delhi, Aug 12: Renewable energy could lower electricity tariffs for India’s small and medium steel units by as much as 34 per cent (worth ₹2.2 crore to ₹2.4 crore a year per unit depending on cluster and unit size), according to a report released on Wednesday at the Confederation of Indian Industry (CII) Green Steel and Mining Summit in Raipur. With electricity accounting for up to 40 per cent of their operating costs, the report identifies renewable power procurement as the sector’s most immediate route to lower costs and lower emissions. Renewable electricity now costs ₹4.5 to ₹6 per unit in several states, against grid tariffs of ₹7 to ₹8, which is what makes the saving possible.
Twenty-two clusters were ranked on a Renewable Energy Attractiveness Index, with Raipur, Belgaum, Shimoga, Rajkot and Bhavnagar emerging as the top five. The index scores each cluster on state policy, cost-saving potential, electricity consumption, untapped renewable market potential and land availability. The report then takes Raipur and Rajkot as case studies, modelling in detail what a representative unit in each would invest and save if it chooses to integrate renewable electricity. Secondary steel refers to steel produced in smaller electric arc and induction furnaces rather than large blast furnaces, along with the re-rolling mills, forging units and foundries that turn it into finished products.
The report, “Powering India’s Secondary Steel Transition: The Business Case for Cluster-Based Renewable Electricity Procurement”, was conceptualised by the India Green Steel Coalition (IGSC), a joint initiative of WWF-India and the CII-Godrej Green Business Centre (CII-GBC), to build the business case for accelerating renewable energy adoption in India’s secondary steel sector. The study was undertaken by JMK Research & Analytics with support from the India Green Steel Network (IGSN), a platform convened by Climate Catalyst. It evaluates three ways a secondary steel MSME in Raipur and Rajkot can buy renewable electricity over a 25-year project life: full capex, group captive, and third-party open access. The report finds that group captive is the only model that combines an affordable equity outlay with real savings at MSME scale. Under the group captive model, several steel units jointly own the RE plant and draw electricity from it in proportion to their equity stake. Pooling demand across the units brings the project to a viable size that a single MSME steel unit would not reach on its own.
“For units of this scale, for instance in Raipur, a saving of ₹2.4 crore a year is significant, particularly in a sector where margins are narrow. The investment is recovered within two years, which makes it a sound commercial decision. The principal uncertainty for our members is regulatory. Greater assurance that open access approvals will remain valid for the full life of a project would encourage many more units in the cluster to proceed,” said Siddharth Agrawal, Chairman, Steel Subcommittee, CII Eastern Region & Managing Director, Godawari Power & Ispat Ltd.
The savings scale with each unit’s share of the project, since several units participate in one plant to aggregate renewable energy demand. In Rajkot, a foundry taking a 5 megawatt (MW) share of a group captive solar project would put in about ₹1.4 crore in equity and lower its electricity tariff by around 20 per cent. In Raipur, where units (integrated furnace and rolling mill) are larger, a unit taking a 10 MW share would put in about ₹2.7 crore and lower its tariff by around 34 per cent. In both cases the initial investment is repaid within one to two years. In contrast, the full capex model offers the highest savings over the project’s life, but requires substantial upfront investment, dedicated land and in-house maintenance capacity. Third-party open access requires no capital outlay, though applicable surcharges significantly limit the net savings it delivers.
“A cluster-based approach can fundamentally change how MSMEs access renewable energy. Aggregating demand through industrial associations makes projects more bankable, enables optimal plant sizing, and spreads equity participation across multiple consumers, reducing the investment risk borne by any single unit. Coupled with the policy and institutional measures recommended in this report, this model can accelerate renewable energy adoption at scale and shift the secondary steel industry from fragmented, asset-heavy procurement toward more structured and financially efficient sourcing.” said Prabhakar Sharma, Senior Consultant, JMK Research & Analytics.
India’s secondary steel sector accounts for about 44 per cent of the country’s crude steel production and generates an estimated 50 to 60 million tonnes of carbon dioxide (CO2e) annually across more than 1,000 MSME units. While renewable electricity is now cost-competitive and increasingly accessible, with India’s commercial and industrial renewable capacity expanding by about 46 per cent a year over the past five years, uptake within the sector remains limited. Renewable adoption among secondary steel MSMEs stands at around 11 per cent, roughly half the 22 per cent share that renewables hold in the country’s overall electricity mix.
“For India’s secondary steel sector, renewable energy is not just a decarbonisation strategy, it is a business competitiveness strategy. This report shows that models like group captive procurement can help MSMEs reduce electricity costs while lowering emissions. As India develops Green Steel Clusters, access to round-the-clock renewable power will be critical to sustain operations and drive emissions reductions. In this context, such models offer a scalable solution to meet continuous demand while accelerating the shift away from coal-based pathways. The next phase is to translate this into on-ground implementation through stronger industry collaboration, enabling policy support, and pilot projects across steel clusters,” said Vishal Dev, Director – Sustainable Business, WWF-India.
To scale group captive procurement, the report directs its recommendations at state regulators, DISCOMs, and public financing institutions. It calls for time-bound open access concessions for steel clusters, portfolio-level credit guarantees through the Small Industries Development Bank of India (SIDBI) or the Indian Renewable Energy Development Agency (IREDA), and a standard framework for group captives across states.
“MSMEs account for a significant share of India’s secondary steel production, and are central to decarbonising the sector. India is well placed to support that shift. Renewable energy integration is one of the few levers that lowers production costs and emissions at the same time, allowing units to reduce their carbon footprint while becoming more competitive and CBAM compliant. We are committed to supporting initiatives of this kind, which can help unlock renewable energy access at scale for small producers,” said Sakshi Balani, co-Acting CEO and Director, India, Climate Catalyst.