India requires $100B to decarbonize heavy industries

Investment in renewable energy is crucial to meet decarbonization goals by 2030.

India needs to invest approximately $100 billion to achieve its target of 120 gigawatts of renewable energy capacity by 2030 to fully decarbonize its heavy industries. This involves three major industries: steel, aluminium, and cement, which together account for about 90% of the demand, according to Aditya Lolla, Asia Programme Director at Ember.

"Ember’s recent analysis found that to decarbonize the electrical supply in Indian heavy industries, about 120 gigawatts of renewable energy capacity is needed," Lolla explained. The cost of building these renewables varies significantly based on industry specifics and the type of renewable resource utilised. "For example, in India, a gigawatt solar plant requires somewhere around $600 to $700 million today, whereas a similar-sized wind power plant might need much higher investment," he noted.

The Indian government has been proactive in fostering the adoption of green technologies through various policy interventions. One of the major challenges faced by Indian industries is the complex electricity tariff structures. "They are having to actually pay excess electricity costs due to a web of cross-subsidies, and this makes it really tough for the industries to electrify any of their processes at large scale and also move to renewables," he said. To address this, the government is working on rationalising electricity prices.

Additionally, the government is providing financial incentives and investing in research and development to support early-stage electrification projects. "The government is also thinking about modernising electricity grids and facilitating integration of renewable energy," Lolla added. 

Indian industries are increasingly aware of international emission standards and are actively seeking ways to comply. From a technology readiness perspective, some industries are better positioned than others. "The steel industry basically has a better option, as they have the option to move to electric arc furnaces to electrify their existing processes," he said. The idea is to source this electricity from renewable sources.

Many Indian companies are already planning for this shift, investing in technologies such as those based on hydrogen. "At the moment, one of the hot things in the Indian industrial sector is corporate power purchase agreements," Lolla mentioned. "This can actually drive decarbonization in the near term, while companies adjust to the new international norms in the long run," he added.

The pace at which new technologies like green hydrogen are adopted will significantly influence the decarbonization of India's industrial sector. "Overall, Indian industries have options, but they need policy push and policy support to be able to meet these international emission standards," Lolla concluded.