Green Power Procurement in the Aluminium Sector in India
Case Study: Vedanta Aluminium
India’s aluminium industry ranks among the nation’s most energy-intensive and hard-to-abate, contributing significantly to the country’s industrial carbon footprint. The sector is highly consolidated, with three major companies dominating aluminium production, including Hindalco, Vedanta, and NALCO. All three have established decarbonization goals aligned with India’s commitment to achieving net zero emissions.
Figure 1: Net zero roadmap of aluminium players
Source: Industry Annual reports, JMK Research
Note*: Net zero as per CII National Award for Excellence in Energy Efficiency
India’s aluminium sector depends on captive coal-based power plants (CPP) to meet the high electricity demands of smelters. All major producers operate their own CPPs, occasionally supplying surplus power to the state grid. Given that aluminium smelters consume approximately 14-15 MWh of electricity per tonne produced, a compelling opportunity exists to shift toward renewable energy.
Renewable energy solutions, particularly wind-solar hybrid (WSH) systems and RE combined with energy storage offer promising pathways for reducing emissions in this sector. The complementary generation profiles of WSH systems make them especially suitable for aluminium smelters, which require stable, continuous power. As battery energy storage costs continue to fall, coupling renewable energy with storage could be a viable strategy to ensure a round-the-clock power supply.
Although aluminium producers cannot phase out existing captive coal-based power plants due to their integration into current operations, they have a significant opportunity to adopt renewable energy for upcoming capacity expansions. By 2030, leading producers plan to add around 4.5 million tonnes per annum of aluminium capacity. Energizing this new capacity with renewable power will curb incremental emissions and drive the sector’s transition towards a low-carbon future.
Based on these upcoming opportunities, the following three mutually inclusive growth scenarios are projected for the aluminium sector by 2030:
- Scenario 1: Meeting 50% of additional aluminium capacity demand with renewables: As aluminium capacity expands, half of the additional electricity demand could be met through RE, reducing the need for new CPPs.
- Scenario 2: Transitioning grid electricity consumption to renewable energy: The sector currently meets a small share of its smelting energy needs through state grid supply. Transitioning this entirely to renewable energy offers a quick decarbonization solution.
- Scenario 3: Adopting alternative fuels like green hydrogen in alumina refineries: By 2030, it is assumed that 5% of the energy currently derived from coal in alumina refineries will be replaced with green hydrogen, particularly for high-temperature processes like calcination. This gradual adoption can contribute significantly to emission reductions.
Based on the above scenarios JMK Research estimates that by 2030, the Indian aluminium sector is expected to integrate approximately 18-20 GW of solar and wind capacity, requiring about 104 MW/ 416 MWh energy storage system. This transition will necessitate an estimated investment of around US$ 5 Billion (about Rs. 425 billion).
Figure 2: Expected Renewable installations under various scenarios in the aluminium sector by 2030
Source: JMK Research
Table of Content
- Aluminium Sector in India
- Aluminium Manufacturing Process
- Ways to Decarbonize
- Leading Players in Aluminium Sector
- Case Study- Vedanta Aluminium
- Company Overview
- Energy Consumption and Emissions
- Sustainability Initiatives
- Renewable Energy Adoption
- Renewable Energy Benefits
- Other Decarbonization Measures and Sustainability Measures
- Way Forward for Aluminium Sector