A new report by energy think tank Ember has found that solar power offers a significant cost-saving opportunity for India’s steel sector, potentially reducing production expenses by up to 10 percent in certain operations.
The report highlights standalone electric arc furnace (EAF) steelmaking as the segment poised to benefit the most. Due to high electricity consumption in EAF setups, solar energy adoption could drastically reduce operational costs, especially as grid power prices continue to rise.
“For direct reduced iron-arc furnace (DRI-EAF) based steelmaking, the potential savings are estimated at 2 to 5 percent,” the report noted. On the other hand, more captive coal-based generation-dependent aluminium and cement industries demonstrate a comparatively weaker cost-saving potential.
In spite of this, the total opportunity is gargantuan. Steel alone represents 9.4 GW of India’s industrial solar opportunity.Combined with cement and aluminium industries, the total potential for open-access solar installations in heavy industry stands at 20 GW, according to Ember.
The think tank estimates that tapping into this opportunity could offset up to 29 million tonnes of CO₂ emissions annually, offering a win-win scenario for both businesses and the environment.
Geographically, the report pointed to Odisha and Chhattisgarh as critical hotspots, with over 40 percent of the solar potential concentrated in these two industrially advanced states. Recent exemptions from open-access charges in these regions have further enhanced the commercial appeal of solar power, paving the way for green manufacturing hubs.
However, the report noted that the aluminium industry may not experience the same economic benefit, as most of its operations are supported by in-house coal power plants, limiting the immediate need for alternative energy sources.
Ember emphasized that as India moves toward a green steel taxonomy, solar adoption can align industry operations with low-emission targets. This transformation is expected to attract international climate finance and corporate investments, giving a boost to India’s clean energy and manufacturing ambitions.
With policymakers promoting industrial decarbonization and businesses facing pressure to cut emissions, the shift to renewable energy in steel and heavy industry is gaining momentum.
