Solar power is setting out an opportunity for the companies in steel sector to reduce their production cost, potentially saving up to 10% in some operations according to reports by Energy think tank Ember.
The report says that the greatest benefits are observed in the standalone electric arc furnace( EAF) used in steel making, using solar energy to cut the cost of operational expenses while saving 2- 5 percent using the direct reduced iron arc furnace (DRI-EAF) steel production compared to traditional methods of steel making.
“For direct reduced iron-arc furnace (DRI-EAF) based steelmaking, savings range between 2-5 per cent, while for cement manufacturing, the potential is lower,” the report added.
Solar can offset the high cost of grid power used in the steel sector, which contributes 9.4 GW. However, in setups similar to standalone arc furnaces used in secondary steelmaking, solar could reduce production costs by up to 10 percent. Reports also highlighted that the aluminium industry is less likely to experience a cost reduction due to its high dependence on coal-based energy sources.
Despite their reliance on captive coal generation, India’s three big heavy industries, steel, cement, and aluminium, present a 20 GW solar open-access market opportunity. However, Cement and Aluminium together represent 11 GW market.
Regionally, more than 40% of the 20 GW open-access solar potential for heavy industries is concentrated in just two states, Odisha and Chhattisgarh, having been the major industrial hub for steel and aluminium manufacturing in the country. The recent exemptions in open access costs, such as the fees exempted to use the power grid to deliver electricity, have made it more attractive in these regions, making it a commercially feasible alternative for companies.
These developments can support the green transition plans with greener manufacturing hubs, attracting more global investments.