Across India's secondary steel sector, the electricity powering furnaces and rolling mills is emerging as one of the most important levers for making steel cleaner — and potentially more competitive.

A new report released in August 2026 has put a sharper figure on that opportunity.

Smaller steelmakers, which account for nearly 40 percent of India's crude steel production, could reduce their annual electricity costs by around ₹22 million to ₹24 million per unit — roughly $250,000 to $275,000 — by shifting towards renewable electricity.

The potential reduction in power costs could reach 34 percent.

The findings arrive as India builds a broader policy framework for green steel.

The Ministry of Steel has already established a national Green Steel Taxonomy, introduced certification mechanisms and begun supporting green-hydrogen pilots.

The latest evidence from the secondary steel industry adds another dimension: renewable electricity can be a practical part of the commercial equation as well as the decarbonisation equation.

Renewable power changes economics

Electricity is a particularly important cost for India's smaller steel producers. According to the new report, power can account for as much as 40 percent of operating costs for many secondary steel MSMEs.

That makes electricity procurement a significant determinant of operating economics.

The report, Powering India's Secondary Steel Transition: The Business Case for Cluster-Based Renewable Electricity Procurement, argues that renewable power can reduce this burden while lowering emissions.

The report was developed by the India Green Steel Coalition, a joint initiative of WWF-India and the Confederation of Indian Industry, with support from Climate Catalyst and research inputs from JMK Research.

It focuses particularly on the secondary steel sector, where smaller producers play a substantial role in India's overall steel output.

The proposed model centres on cluster-based procurement. Instead of individual smaller producers developing renewable projects independently, groups of steelmakers can aggregate their electricity demand and jointly invest in renewable generation.

Such an approach allows multiple industrial units to participate in larger projects and match generation capacity more closely with their combined electricity requirements.

Secondary steel holds key

India's steel industry has a distinctive production structure, with a substantial share of output coming from secondary producers using electric furnaces and other production routes.

The secondary steel sector contributes nearly 40 percent of India's crude steel production, according to the August report.

That makes the sector particularly important for India's wider green-steel ambitions.

Improvements across smaller plants can potentially influence a large portion of national steel production rather than remaining confined to a handful of large integrated producers.

The renewable-energy opportunity is especially relevant because electricity-based steelmaking already provides a natural connection between steel production and India's rapidly expanding clean-power capacity.

The report estimates that only about 11 percent of smaller steelmakers currently use renewable electricity, compared with roughly 22 percent of India's overall electricity mix.

That gap indicates substantial room for renewable electricity to become a larger component of secondary steel production.

Green steel gets definition

India's green-steel transition is also becoming more structured through government policy.

The Ministry of Steel notified the country's Green Steel Taxonomy in December 2024, establishing an emission-intensity framework for classifying steel.

Under the taxonomy, steel produced with an emission intensity below 2.2 tonnes of CO₂ equivalent per tonne of finished steel qualifies for a green rating.

The system creates three green ratings. Steel with emissions below 1.6 tonnes of CO₂ equivalent per tonne of finished steel receives a five-star rating, while steel between 1.6 and 2.0 tonnes receives four stars and steel between 2.0 and 2.2 tonnes receives three stars.

The framework gives producers, buyers and policymakers a common basis for identifying lower-emission steel.

The latest figures show that the framework is already moving into implementation. During FY 2025-26, 90 steel units received green-steel certification, representing total green-steel production of 12.4 million tonnes.

That marks an important movement from defining green steel to measuring and certifying it.

Renewable energy gains importance

For steel producers, renewable electricity can influence emissions through more than one route.

Electricity-intensive secondary steelmaking can draw on solar and wind power through open-access arrangements, captive projects, group captive structures or other procurement models.

Increasing renewable generation in India's power system is expanding the options available to industrial consumers.

India's clean-power capacity has expanded substantially over the past decade, creating a larger base from which industrial consumers can source renewable electricity.

The secondary-steel report places particular emphasis on the cluster model because smaller producers can combine demand and investment.

The approach can create renewable projects of sufficient scale while distributing investment and electricity requirements across several industrial units.

For a sector dominated by numerous smaller producers, this aggregation model provides a way of translating India's large-scale renewable-energy expansion into industrial decarbonisation.

Steel meets global markets

The green-steel transition is also becoming increasingly relevant to international trade.

The European Union's Carbon Border Adjustment Mechanism entered its definitive phase in 2026, requiring importers to account for embedded emissions in covered products, including iron and steel.

Recent research published in Nature Climate Change has specifically examined the early effects of CBAM on EU-India steel trade.

This makes the carbon intensity of Indian steel an increasingly important part of its international market position.

Lower-emission electricity can therefore become part of the broader industrial strategy for producing steel that is better aligned with emerging international carbon standards.

The issue is no longer limited to environmental reporting. Carbon intensity is becoming increasingly relevant to how industrial products move across borders.

Hydrogen adds another layer

Renewable electricity is not the only pathway India is pursuing.

The government is also supporting green-hydrogen applications in steelmaking.

The Ministry of Steel has awarded six pilot projects under the National Green Hydrogen Mission, covering technologies such as hydrogen injection into direct-reduced iron production, hydrogen use in blast furnaces and hydrogen-based DRI production.

The government has allocated ₹455 crore, approximately US$48.4 million, for pilot projects involving green hydrogen in the steel sector through FY 2029-30.

These initiatives complement renewable electricity. Solar and wind generation can provide clean power directly to steel plants while also supplying the electricity required to produce green hydrogen.

Together, renewable power and hydrogen form two interconnected elements of India's emerging low-carbon steel ecosystem.

Industry builds green momentum

The movement towards greener steel is increasingly visible across government, industry and research institutions.

The Ministry of Steel has published its Greening the Steel Sector in India: Roadmap and Action Plan, developed through sectoral task forces and stakeholder consultations.

The roadmap examines technological, economic and policy measures needed to move the industry towards lower emissions and India's 2070 net-zero target.

The Green Steel Taxonomy provides the measurement framework, while certification gives producers a mechanism to demonstrate their performance.

Renewable electricity, energy efficiency, scrap utilisation and green hydrogen add different pathways through which emissions can be reduced.

This creates a multi-layered transition rather than reliance on one technology.

For secondary steelmakers, renewable electricity is particularly relevant because it can connect directly with their existing electricity-intensive production processes.

Competitiveness meets decarbonisation

The emerging picture is increasingly one in which environmental performance and industrial economics can move together.

The August report's finding of potential power-cost reductions of up to 34 percent gives renewable electricity a commercial dimension.

For smaller producers, lower electricity expenditure can directly affect operating economics, while cleaner electricity can reduce the emissions intensity associated with production.

This matters for India's wider industrial ambitions. Steel remains fundamental to construction, infrastructure, automobiles, engineering, energy equipment and defence. As India's economy expands, steel demand is expected to remain closely linked to investment and manufacturing activity.

Making that additional steel with progressively lower emissions will consequently be an important part of India's industrial transition.

The Ministry of Steel's own data show that the green-steel framework is already generating certified production.

The 12.4 million tonnes certified during FY 2025-26 demonstrate that low-emission steel is moving from policy terminology into measurable industrial output.

India’s green steel opportunity

India's green-steel opportunity is ultimately larger than the substitution of coal-generated electricity with solar or wind power.

It is about creating an industrial model in which energy costs, carbon intensity, technology and export competitiveness increasingly reinforce one another.

The country's expanding renewable-energy base provides the electricity foundation.

The Green Steel Taxonomy provides a common definition and certification framework. Green-hydrogen pilots open another technological pathway, while the secondary steel sector offers a particularly large field for renewable-power adoption.

The latest research gives the transition a tangible economic dimension: smaller steelmakers could potentially cut power costs by as much as a third while reducing emissions.

For India, that combination matters. Steel will remain one of the foundations of the country's industrial expansion, but the way it is produced is changing.

The emerging opportunity is to make the country's vast steelmaking capacity increasingly compatible with a power system dominated by renewable energy — turning cleaner electricity into a source of both lower emissions and stronger industrial competitiveness.