In the dynamic industrial landscape of India, heavy industries such as aluminium, steel, and cement are on the brink of a renewable revolution. Traditionally reliant on captive coal generation, these sectors now face a transformative 20 GW solar open access opportunity, a prospect that promises to slash production costs and reduce carbon emissions by up to 29 million tonnes annually. For instance, the steel sector alone, which contributes around 9.4 GW to this market, could see production costs drop by up to 10 per cent in setups like standalone arc furnaces, thanks to a shift from expensive grid power to open-access solar. Meanwhile, cement and aluminium, despite their ongoing reliance on captive coal, add another 11 GW to the potential.
Aluminium, a cornerstone of India’s power sector, is widely used in overhead conductors, power cables, aircraft, building materials, and even consumer appliances like refrigerators. Yet, the path to decarbonising aluminium production is fraught with both financial and technical challenges.
According to the Council on Energy, Environment and Water (CEEW), achieving near net-zero emissions in existing aluminium plants will require a capital investment of around 2,18,241 lakh crore (USD 29 billion) and an additional annual operating expenditure of approximately INR 26,049 crore (USD 3.5 billion). CEEW’s study further reveals that utilising renewable energy can abate 49 per cent of emissions, equivalent to 38 million tonnes of CO₂, though near-net-zero aluminium is nearly 61 per cent more expensive than its conventional counterpart.
On a brighter note, incremental improvements through enhanced energy efficiency in alumina processing and aluminium production, alongside measures such as electrolysis off-gas waste heat recovery, can reduce production costs by about 1.2 per cent.
The study also outlines alternative strategies. For example, by incorporating alternative fuels like biomass in alumina refining and retrofitting with inert anodes in smelting, it is possible to reduce emission intensity to 16.13 tonnes of CO₂ per tonne of aluminium, a 23 per cent reduction, with a cost increase of less than one per cent.
However, for deeper decarbonisation, shifting to renewable energy would result in an 18 per cent cost increase while abating almost half of the emissions. In contrast, if renewable energy is not embraced and carbon capture and storage (CCS) is instead deployed at USD 50 per tonne of CO₂, net-zero aluminium would cost about 21 per cent more than the conventional base price. In a near-net-zero scenario, the industry would require roughly 3.85 GW of round-the-clock renewable energy capacity.
Much of this solar promise is concentrated in the states of Chhattisgarh and Odisha, which together account for nearly 40 per cent of the assessed open-access solar market. These regions, already renowned for their rich mineral reserves and long-standing industrial legacies, are now poised to evolve into green manufacturing hubs. In Odisha, for example, the vision of green industrial parks is rapidly taking shape, setting the stage for an export-driven, low-carbon future.
Yet, challenges remain. Sourcing up to 50 per cent of electricity from variable renewable energy is already cost-competitive for heavy industries. However, achieving a 24/7 renewable power supply demands innovative approaches, as models suggest that securing round-the-clock clean power could cost between 8 and 11 INR per kWh, roughly 3.5 times the cost of solar, with battery storage alone constituting 60 per cent of this expense.
“Renewables are already a cost-effective solution for Indian industries, and 24/7 clean power is the benchmark for the future of renewable procurement. This report highlights that companies can make significant progress toward round-the-clock renewable supply today, with further innovation in storage, flexible demand, and market design needed to achieve full 24/7 coverage at competitive rates,” said Killian Daly, executive director at EnergyTag.
Despite these hurdles, the drive towards 24/7 renewable procurement is clear, underpinned by both economic incentives and the growing global demand for low-carbon aluminium. Major export markets like South Korea (2,81,301 tonnes), Malaysia (2,24,383 tonnes), Turkey (2,11,109 tonnes) Mexico (1,44,103 tonnes), Russia (1,39,191 tonnes), Japan (1,33,371 tonnes) and US (1,22,440 tonnes) are increasingly prioritising low-carbon products, signalling that a persistent reliance on coal-powered aluminium may soon compromise India’s competitiveness in international trade.
In this era of industrial transformation, the journey towards a cleaner, greener aluminium industry encapsulates both formidable challenges and promising opportunities. With strategic investments, a focus on energy efficiency, and a commitment to renewable innovation, India’s heavy industries are not merely adapting to change, they are actively reshaping the future of manufacturing on a global stage.
