MSMEs in India's secondary steel sector can reduce their power bills by up to 34 pc per year: Report

New Delhi: Micro, small and medium enterprises (MSMEs) in India's secondary steel sector can reduce their power bills by up to 34 per cent per year and significantly slash greenhouse gas emissions by switching to renewable energy, according to a new report.

The secondary steel sector, largely driven by MSMEs, contributes around 38-40 per cent of India's total crude steel production, the report added. These units are highly fragmented, with capacities ranging from 1,000 tonnes per annum to 0.1 million tonnes per annum.

The report, 'Powering India's Secondary Steel Transition: The Business Case for Cluster-Based Renewable Electricity Procurement', was released on Wednesday by a consortium of environmental groups and industry bodies including the Confederation of Indian Industry, WWF-India, the nonprofit group Climate Catalyst and the think tank JMK Research.


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For MSMEs in the secondary steel sector, electricity accounts for up to 40 per cent of their operating costs. Using renewable energy could help them save between Rs 2.2 crore and Rs 2.4 crore a year per unit, said the report.

It added that the best way to save money on electricity bills is for such steel producers to jointly own a renewable plant and draw power in proportion to their stake.

In a statement, Prabhakar Sharma, a senior consultant at JMK Research and Analytics, said, "A cluster-based approach can fundamentally change how MSMEs access renewable energy. Aggregating demand through industrial associations makes projects more bankable, enables optimal plant sizing, and spreads equity participation across multiple consumers, reducing the investment risk borne by any single unit."

Moreover, renewable energy will help these MSMEs lower their emissions. This is significant because India's secondary steel sector generates an estimated 50 to 60 million tonnes of carbon dioxide annually across more than 1,000 MSME units.

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Currently, renewable adoption among secondary steel MSMEs stands at around 11 per cent, roughly half the 22 per cent share that renewables hold in the country's overall electricity mix.

Sakshi Balani, co-acting CEO and director (India) at Climate Catalyst, said in a statement, "Renewable energy integration is one of the few levers that lowers production costs and emissions at the same time, allowing units to reduce their carbon footprint while becoming more competitive."