Industry Odisha Bureau, Sep 08: State-run SECI is examining a plan to pool factory energy demand. The proposal targets millions of small manufacturers using gas. These businesses rely on gas for industrial heat processes. SECI could aggregate this demand and float tenders. Green-power suppliers would then bid for pooled contracts. The discussions remain at an early stage currently.
Industrial heat covers processes like smelting, refining and drying. Many smaller units still use gas-based furnaces. Electrification would mean replacing or supplementing these systems. SECI already has experience aggregating renewable-energy demand elsewhere. It has previously worked on green-ammonia demand aggregation too.
Gas supply concerns have added urgency to the plan. Disruptions from West Asia squeezed India’s gas allocations. Households received priority during the resulting rationing period. Industrial consumers consequently faced reduced gas availability. This vulnerability has increased interest in electricity alternatives.
Electricity already accounts for 16% of manufacturing costs. Around 40 gigawatts of green-power agreements remain unsigned. Most of this capacity is solar-based generation. Storage integration for this capacity remains limited currently. Solar output drops precisely when evening demand rises. Transmission and evacuation delays add further constraints too.
Large manufacturers can access captive renewable power sources. They also sign commercial and industrial power agreements directly. Smaller MSMEs typically lack this financial and infrastructure capacity. Demand aggregation could help narrow this procurement gap somewhat. It would not guarantee automatically cheaper electricity for everyone.
Switching to electric furnaces involves substantial additional costs. Businesses may need new transformers and higher sanctioned loads. Technical training and operational adjustments add further expense. Small batch furnace investments can reach tens of lakhs. Larger installations for forging or glass may cost crores.
Reliability remains a major concern for potential adopters. Power interruptions can halt production and raise costs. Many MSMEs cannot easily afford backup power infrastructure. Cheap electricity without dependable supply may not suffice.
Industry voices note conditional paths to viability. Electrification works best replacing old, inefficient gas furnaces. One threshold cited was electricity priced below ₹8 per unit. Access to open-access or captive solar power also helps. Payback periods can range from three to ten years. Some installations may see no commercial payback at all.
Europe’s carbon border mechanism is pushing some manufacturers toward change. India’s Bureau of Energy Efficiency has separately studied electrification strategies. That work spans residential, industrial and mobility sectors broadly.
Experts suggest transition support could include capital subsidies. Interest subvention for furnace replacement may also help. Concessional loans and cluster-level power procurement were also proposed.
Demand aggregation could improve renewable-power procurement scale for factories. Yet infrastructure costs, reliability concerns and financing gaps persist. Whether pooled buying translates into wider MSME electrification remains uncertain.
