Energy Efficiency Measures and Green Energy Integration in Indian Steel Sector

Satish Kumar Agarwal, CMD of Kamdhenu Limited, shared his perspectives with Industry Outlook on how the Indian steel industry, which consumes 6-7% of the nation’s energy, is adopting technologies like EAFs, CDQ, and green hydrogen to enhance efficiency and reduce emissions. An industrial expert with over five decades of experience, Mr. Agarwal pioneered Kamdhenu’s franchise model, transforming it into one of India’s leading manufacturers of international-quality steel bars.

Indian steel sector consumes around 6-7% of the nation’s energy, highlighting significant efficiency improvement potential. What energy-efficient technologies are Indian steel manufacturers adopting to reduce consumption and emissions?

The Indian steel sector is, without a doubt, a significant energy consumer, and it has been diligently exploring and implementing various energy-efficient technologies to minimize its carbon footprint and enhance operational efficiency. Advanced process control systems which facilitate real-time monitoring and optimization of process parameters, ultimately result in substantial energy savings. Moreover, I am confident that in the future, artificial intelligence and machine learning will be able to identify opportunities for energy savings, optimize production schedules, and enhance overall efficiency.

Further attempts to reduce energy consumption and emission were made by the industry with several technologies like Coke Dry Quenching (CDQ), which cools hot coke using inert gas, and Pulverized Coal Injection (PCI), which reduces coke consumption. The industry is also working on Waste Heat Recovery Systems that capture waste heat and employ it for power generation or operational requirements. Electric Arc Furnaces are more energy-efficient and are used in the manufacture of scrap-based steel.

The steel industry is adopting renewable sources of energy to reduce the usage of fossil fuels and for sustainability. The clean power generated by the solar systems helps in running the plants, whereas wind turbines located in suitable geographical locations provide renewable electricity.

India is the world’s second-largest steel producer but lags in renewable energy integration compared to global benchmarks. What challenges are Indian steelmakers facing in incorporating solar and wind energy into their operations?

The Indian steel industry, although a global powerhouse, faces significant challenges in integrating renewable energy sources like solar and wind power. A major hurdle in the adoption is the irregular nature of these sources, which can lead to fluxes in energy supply. The inconsistent energy supply can disrupt the steelmaking process, which requires a steady and reliable energy supply. Another challenge is the high initial investment cost, particularly for large-scale installations. This is a significant barrier for steelmakers, especially smaller ones, who may have limited financial resources. While the government has clear positive intentions in promoting renewable energy adoption in India, challenges such as grid integration and financing persist. However, with continued government support and technological advancements, the Indian steel industry is poised to become more sustainable and environmentally friendly.

Electric arc furnaces (EAFs) reduce energy consumption by up to 75% compared to traditional blast furnaces. How are Indian steelmakers transitioning to EAFs, and what barriers hinder wider adoption?

Indian steelmakers are rapidly transitioning to Electric Arc Furnaces (EAFs) to reduce energy consumption and carbon emissions. EAFs offer significant advantages over traditional blast furnaces, including lower energy consumption and reduced greenhouse gas emissions. However, several barriers hinder the wider adoption of EAFs in India. High initial investment costs associated with setting up EAF facilities are a major deterrent for some steelmakers. Another significant barrier is the reliability and affordability of electricity supply. EAFs require a considerable amount of electricity, and fluctuations in power supply or high electricity costs can impact their operational efficiency and profitability. Despite these challenges, the Indian government has been taking steps to promote the adoption of EAFs through various policies and incentives. By addressing these barriers and encouraging the adoption of cleaner technologies, India can significantly reduce the carbon footprint of its steel industry.

The National Steel Policy 2017 targets increased energy efficiency and a shift to green production methods. How effectively are Indian steel companies aligning with the policy’s decarbonization and efficiency goals?

Steel manufacturing companies are fully aware of this and are making significant efforts to align with the government’s goal of more efficient and cleaner production, as envisioned in The National Steel Policy (NSP) 2017. Companies are focusing on reducing their carbon footprints and setting reduced emission targets for themselves with the eventual plan of becoming net-zero emitters in the future. Manufacturing processes such as Hydrogen-based Direct Reduced Iron (DRI) and carbon capture technologies are being explored to offset emissions. With the government introducing guidelines for pilot projects using green hydrogen in the steel sector in February 2024, the steel sector is an important stakeholder in the National Green Hydrogen Energy Mission. The introduction of electric arc furnaces (EAFs) to replace traditional blast furnaces is an example. However, the financial burden of adopting new technologies remains a significant hurdle for many companies in the sector. Fiscal and policy support from the government is a must for the steel industry to achieve sustainable growth.

Global energy price volatility affects operational costs, making efficiency and sustainability critical for competitiveness. How are Indian steel companies balancing cost management with green energy adoption in volatile market conditions?

In the context of volatile market conditions, it is important to balance cost management with the adoption of green energy solutions such as renewable energy sources for production. Steel production is a highly energy-intensive process, and the global energy price volatility makes it imperative for steel companies to rely on cost management strategies to mitigate the volatility. From vertical integration of operations to flexible production processes and enhancing operational efficiencies, companies are going all out to mitigate the impact of a volatile energy market. Government initiatives such as the PLI scheme also offer financial incentives to adopt green technology. Research and development is another key area that provides insights and options for cost management. The development and production of higher-quality value-added products also return higher margins that can somewhat offset volatility. With a focus on long-term sustainability and innovation, Indian companies are carefully navigating both cost pressures and environmental goals.

Hydrogen-based steelmaking could reduce emissions by up to 90% but requires significant investments. What steps are Indian steel manufacturers taking to explore hydrogen-based technologies for long-term sustainability?

Hydrogen produces near-zero carbon output when used in steelmaking and is a viable option for decarbonizing steel. However, adopting hydrogen in the steelmaking process will require significant investments and will be a complex process. The groundwork for hydrogen-based steel production has begun in India, and several companies have been approved to use hydrogen energy in steel production under the National Green Hydrogen mission. India is also considering developing a pure hydrogen-based DRI (direct reduction of iron) technology for making green steel. The success of the pilot projects and the government-backed initiative will give a huge push to the decarbonization of the steel industry.