The Solar Energy Corporation of India is developing a pioneering model to pool demand from small and medium factories for renewable thermal energy, aiming to simplify the shift from fossil fuels and lower costs, but faces challenges in integrating smaller users into the clean energy transition.
The Solar Energy Corporation of India is preparing to tackle one of the hardest parts of decarbonising the economy: the heat used inside factories. While India has made progress in cleaning up electricity generation, most industrial processes still rely on coal, gas or oil burned directly on site. That is especially true for smaller factories clustered across states such as Gujarat, Tamil Nadu, Maharashtra and Punjab, where the shift to electric heating is technically possible but commercially complicated. The Financial Express said SECI is still working out the mechanism, with no final tender or tariff announced yet.
According to SECI’s own mandate, the state-owned renewable energy agency has long acted as a central intermediary between power developers and buyers, using competitive bidding and long-term contracts to expand clean energy supply. It has already awarded more than 73.8 gigawatts of renewable capacity and has built experience with hybrid, storage-backed and round-the-clock supply structures. The corporation is now looking to apply that model to industrial heat by pooling demand from many smaller users into one larger procurement exercise.
That approach is designed to solve a basic market problem. A renewable developer may not want to sign separate agreements with dozens or hundreds of factories needing only modest amounts of power. By combining those needs, SECI can present a much larger block of demand, creating a more attractive auction and potentially lowering the tariff. Mint reported earlier that the government wants to use bulk green-power purchases to make the transition to electric heat cheaper and more secure for small and medium factories.
But cheaper electricity alone will not electrify a factory. Many industrial users would still need to replace boilers, furnaces or other equipment, add new wiring and grid connections, and accept production disruptions during installation. The challenge is even greater in high-temperature sectors such as steel and cement, where electricity can only replace part of the process or may require a different production route altogether. In many cases, the economics depend not just on power prices but on whether the factory can afford the new machinery and the downtime that comes with it.
The pricing structure also matters. Industrial users buying through open access can face transmission and wheeling charges, banking fees, standby charges and cross-subsidy surcharges, all of which can eat into the savings from cleaner power. That means SECI’s role as a procurement intermediary can help with the base tariff, but it cannot remove the wider policy costs embedded in state electricity systems. The success of the scheme will therefore depend on whether states, utilities and industrial buyers can align on a workable commercial structure.
SECI already has a template for this kind of aggregation. Under the National Green Hydrogen Mission, it has bundled demand from fertiliser plants and run auctions for green ammonia. On the supply side, SECI also uses a familiar model in which it signs power purchase agreements with developers and corresponding power sale agreements with distribution companies, helping projects secure financing and reach the market at scale. Its wind programme follows the same logic, with transparent tariff-based bidding and 25-year contracts.
The bigger question is whether smaller manufacturers can be brought into the fold. A July 2026 document cited in the report suggested SECI was looking for buyers with at least 50 megawatts of demand, although smaller users could be included where aggregation is feasible. It also pointed to credit requirements, guarantees and escrow arrangements, which may be manageable for large industrial groups but harder for many MSMEs. If SECI wants the model to reach the broad base of Indian manufacturing, it will need a way to absorb those risks without excluding the very firms it wants to help.
For now, the plan is best seen as an important enabler rather than a complete solution. SECI can make clean electricity easier to buy in bulk. It cannot on its own solve the financing, equipment and grid-infrastructure problems that stand between an industrial furnace and an electric one. Still, by lowering procurement barriers and organising demand at scale, the agency could become a central part of India’s next industrial-energy transition.
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