New policy brief argues that decarbonising industrial heat—not just electricity—could be the missing link in India’s net-zero journey, with SMEs at the centre of the transition.
India’s clean energy transition has largely been driven by record-breaking growth in solar and wind power. Yet one of the country’s biggest sources of carbon emissions remains relatively overlooked—industrial heat. A new policy brief released by The Energy and Resources Institute (TERI) argues that solar thermal technology could become a critical solution for decarbonising India’s industrial sector, particularly for small and medium enterprises (SMEs) that continue to rely heavily on coal, diesel, and other fossil fuels.
Released at a hybrid event in New Delhi, the report, “Solar Thermal Energy for Industrial Decarbonization,” shifts the conversation beyond renewable electricity and highlights the vast potential of solar-generated process heat for industries such as food processing, textiles, dairy, pharmaceuticals, and chemicals.
Why Industrial Heat Matters
While India’s renewable electricity capacity has expanded rapidly, industrial process heat remains one of the hardest sectors to decarbonise. Manufacturing industries require continuous thermal energy for drying, boiling, pasteurisation, washing, and steam generation—activities that still depend largely on fossil fuels.
According to TERI, replacing even a portion of this demand with solar thermal systems could significantly reduce greenhouse gas emissions, lower fuel costs, and improve India’s energy security. The report argues that industrial decarbonisation cannot be achieved through electrification alone and that clean thermal energy deserves equal policy attention.
National Mission Could Accelerate Adoption
One of the report’s strongest recommendations is the creation of a National Solar Thermal Mission backed by long-term financing, fiscal incentives, and dedicated institutional support.
Rather than relying on large subsidies, TERI proposes a market-driven approach that includes fixed-interest loans of up to 15 years, a reduced GST rate of 5%, accelerated depreciation benefits, and policies that encourage private investment. The institute believes predictable financing could remove one of the biggest barriers preventing industries from adopting solar thermal systems.
Pilot Projects Before Large-Scale Rollout
The report recommends beginning with pilot projects in industrial parks serving sectors where heat demand is consistent throughout the year. Shared solar thermal infrastructure, risk-sharing mechanisms, and partnerships with industrial park developers could demonstrate commercial viability before expanding deployment across existing industrial facilities.
TERI also suggests establishing a Mission-led Special Purpose Vehicle (SPV) that would implement demonstration projects, manage project risks, and facilitate process heat supply until the market matures.
SMEs Hold the Key
Speaking during the launch, TERI Director General Dr. Vibha Dhawan emphasised that India’s net-zero ambitions will depend on enabling SMEs to transition to cleaner technologies.
She noted that affordable capital, successful pilot projects, and market-driven ESG incentives would be essential in helping smaller industries overcome financial and technological barriers that currently limit investment in clean process heat solutions.
The message reflects a broader reality: while large corporations often have access to capital and sustainability targets, thousands of MSMEs continue to struggle with high upfront costs despite long-term savings offered by renewable technologies.
India has become a global leader in renewable electricity generation, but industrial heat remains one of the country’s least discussed climate challenges. Solar thermal technologies have existed for decades, yet policy attention has largely favoured solar photovoltaic (PV) systems.
TERI’s policy brief signals a shift in that narrative by positioning solar thermal energy as an essential component of industrial decarbonisation rather than a niche technology. If supported through a dedicated national mission, affordable financing, and successful demonstration projects, solar thermal could help industries reduce fossil fuel dependence while strengthening India’s clean manufacturing ambitions.
As India moves closer to its net-zero targets, the next phase of the energy transition may not only be about generating clean electricity—it may also be about producing clean heat.