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Demand Aggregation Can Cut Power Costs for Steel MSMEs by 34 per cent
Steel

Demand Aggregation Can Cut Power Costs for Steel MSMEs by 34 per cent

A CII Green Steel Summit report in Raipur finds renewable energy could cut electricity tariffs for India's small and medium secondary steel units by up to 34 per cent, equal to Rs22 million (mn) to Rs24 million (mn) per unit. The study says electricity can form up to 40 per cent of operating costs and that renewable power costs Rs4.5 to Rs6 per unit versus grid Rs7 to Rs8.

Twenty-two clusters were ranked on a Renewable Energy Attractiveness Index, with Raipur, Belgaum, Shimoga, Rajkot and Bhavnagar among the top five. The index assessed policy, cost-saving potential, consumption, market potential and land availability, and the report modelled representative units to quantify investments and savings. Secondary steel covers output from smaller electric arc and induction furnaces and associated re-rolling mills, forging units and foundries.

The study, Powering India's Secondary Steel Transition, was produced by the India Green Steel Coalition and JMK Research and Analytics with support from India Green Steel Network. It compares full capex, group captive and third-party open access over a 25-year project life and finds group captive delivers the best balance of equity outlay and savings for MSMEs.

Under group captive several units jointly own the renewable plant and draw power in proportion to equity participation, pooling demand to reach viable scale. In Rajkot a foundry taking a five megawatt (MW) share would invest Rs14 million and cut its tariff by around 20 per cent. In Raipur a unit taking a 10 MW share would invest Rs27 million and reduce its tariff by 34 per cent, with payback in one to two years.

The secondary steel sector accounts for about 44 per cent of crude steel production and emits an estimated 50-60 million (mn) tonne (t) of carbon dioxide annually across more than 1,000 MSME units, while renewable adoption among these units is about 11 per cent versus 22 per cent nationally. It recommends time-bound open access concessions, portfolio-level credit guarantees through SIDBI or IREDA and a standard state framework for group captives to scale uptake and improve competitiveness.

A CII Green Steel Summit report in Raipur finds renewable energy could cut electricity tariffs for India's small and medium secondary steel units by up to 34 per cent, equal to Rs22 million (mn) to Rs24 million (mn) per unit. The study says electricity can form up to 40 per cent of operating costs and that renewable power costs Rs4.5 to Rs6 per unit versus grid Rs7 to Rs8. Twenty-two clusters were ranked on a Renewable Energy Attractiveness Index, with Raipur, Belgaum, Shimoga, Rajkot and Bhavnagar among the top five. The index assessed policy, cost-saving potential, consumption, market potential and land availability, and the report modelled representative units to quantify investments and savings. Secondary steel covers output from smaller electric arc and induction furnaces and associated re-rolling mills, forging units and foundries. The study, Powering India's Secondary Steel Transition, was produced by the India Green Steel Coalition and JMK Research and Analytics with support from India Green Steel Network. It compares full capex, group captive and third-party open access over a 25-year project life and finds group captive delivers the best balance of equity outlay and savings for MSMEs. Under group captive several units jointly own the renewable plant and draw power in proportion to equity participation, pooling demand to reach viable scale. In Rajkot a foundry taking a five megawatt (MW) share would invest Rs14 million and cut its tariff by around 20 per cent. In Raipur a unit taking a 10 MW share would invest Rs27 million and reduce its tariff by 34 per cent, with payback in one to two years. The secondary steel sector accounts for about 44 per cent of crude steel production and emits an estimated 50-60 million (mn) tonne (t) of carbon dioxide annually across more than 1,000 MSME units, while renewable adoption among these units is about 11 per cent versus 22 per cent nationally. It recommends time-bound open access concessions, portfolio-level credit guarantees through SIDBI or IREDA and a standard state framework for group captives to scale uptake and improve competitiveness.

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