Powering Green Growth in Karnataka through Industrial Waste Heat Recovery
Karnataka is the fifth most industrialised state in India and among the top producers of cement and iron and steel. As per the Green Growth Strategy for Karnataka, developed by GGGI, the industrial sector in the state is a dominant electricity consumer, with cement and iron and steel plants accounting for almost 40% of the total industrial electricity demand. In this context, the strategy identified Waste Heat Recovery (WHR) as an important energy efficiency (EE) measure that could be harnessed by the state, especially for the cement and iron and steel industries.
India’s cement industry has a current estimated WHR potential of almost 1000 MW, of which around 275 MW has been installed so far. About 90% of these installations are in the states of Rajasthan and Madhya Pradesh, whereas states like Karnataka (10 MW installed capacity) are lagging behind. As per GGGI’s estimates, there is an immediate potential for deploying over 80 MW of WHR capacity in Karnataka’s cement industries, as well as a long-term potential of 500 MW (by 2030).
WHR based power generation offers an important energy efficiency intervention for industries, which is especially relevant in an economy like India, with an increasing industrial energy demand. In its Intended Nationally Determined Contributions (INDCs) submitted to COP21 under the Paris Agreement, India has set an ambitious target to reduce the emissions intensity of its GDP by 33-35 per cent by 2030 from the 2005 level. Energy efficiency has been identified as a crucial step towards the same. In this context, India’s cement industry has been a frontrunner in implementing low carbon measures, one of which is WHR. WHR is also an important energy efficiency measure under the Bureau of Energy Efficiency’s PAT (Perform, Achieve and Trade) scheme, where cement industry has been identified as one of the ten energy intensive sectors. The state can get surplus firm power into the grid, improving energy security. With an immediate investment potential of $100 million in the state, it will also help in creating green jobs, thus benefiting the state’s overall economy.
However, despite multiple green growth benefits, financial incentives (such as accelerated depreciation benefits), and the availability of proven mature technologies, several barriers prevent the deployment of WHR, most importantly - high upfront investment cost, lack of access to finance, and inadequate policy support (preferential tariff /power purchase agreements).
In this context, GGGI supported the state of Karnataka to accelerate the deployment of WHR. After detailed consultations with various stakeholders to identify appropriate policy interventions to promote adoption of WHR in the state, preferential tariff for electricity generated by WHR was identified as the most appropriate intervention. Such preferential tariff can facilitate long term Power Purchase Agreements (PPAs) with utilities, thereby helping cement industry to secure project finance from banks and other financial institutions. This initiative has the potential to be replicated across other states in India, thereby promoting energy efficiency on a national scale.
GGGI worked with key government and cement industry stakeholders in Karnataka towards the development of a petition seeking a preferential tariff from the Karnataka Electricity Regulatory Commission (KERC), which has the potential to unlock 500 MW of WHR for power generation in the state. This included understanding the existing policy framework for WHR in Karnataka, conducting detailed assessments on cement units to determine the key cost drivers, and supporting the state’s cement industry to prepare tariff petition. GGGI’s initiative received full support from the government, particularly the KERC, who provided constant support and guidance throughout the process. GGGI also worked to build capacity of the cement industry to deal with potential techno-regulatory processes in the event of petition hearing by the KERC.
The opinions expressed herein are solely those of the authors and do not necessarily reflect the official views of the GGKP or its Partners.