Secondary steel produces around 44 per cent of India’s crude steel and emits an estimated 50 to 60 million tonnes of CO₂e a year. Most of these units are micro, small and medium enterprises, and electricity accounts for up to 40 per cent of their operating costs. In several states, renewable electricity is available at Rs 4.5 to 6 per unit, against grid tariffs of Rs 7 to 8. Yet renewables meet only about 11 per cent of the sector’s electricity demand, half the national share of 22 per cent. Financing, open access procedures, state-level implementation and coordination at cluster level were identified as key gaps.
This report identifies the clusters best placed to make the shift, examines Raipur and Rajkot in detail, and models three procurement routes over a 25-year project life. It finds that Group Captive offers the most workable path for MSMEs. A 10 MW Group Captive solar project in Raipur delivers around Rs 2.4 crore in annual savings, landed tariffs roughly 34 per cent below grid, a payback of one to two years and 12,500 tonnes of CO₂ abated each year. In Rajkot, a 5 MW Group Captive solar project saves a representative foundry about Rs 2.2 crore a year at tariffs 20 per cent below grid, while a wind-solar hybrid at the same scale saves Rs 2.6 crore and abates up to 9,460 tonnes of CO₂. The economics depend on scale, and scale depends on aggregation. Five to eight units within a 30 to 50 kilometre radius make a project bankable.
The report sets out three priority recommendations: time-bound open access concessions for cluster-based MSME procurement, with compensation for distribution companies; portfolio-level credit guarantees for cluster special purpose vehicles through SIDBI or IREDA; and a standardised regulatory framework for Group Captive implementation across states.
The report was prepared by JMK Research and Analytics in collaboration with WWF-India, Climate Catalyst and CII-Green Business Centre, under a project supported by the India Green Steel Network.
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Read more on of why cluster-based renewable electricity procurement could be beneficial for secondary steel makers
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