Assessing Fuel-Switching Investment in Sustainable Energy Technology for India’s Industry Sector

This paper presents the framework and assessment approach to model the decision-making process of steel manufacturers investing in new manufacturing line. The model assesses investment choice between the conventional coke-based blast-furnace technology route of producing steel considered here as Conventional Energy Technology (CET) and the hydrogen-based direct-reduced-iron technology route of producing steel considered here as Sustainable Energy Technology (SET). Investing in SET has been a challenge for the industry considering the high capital cost, however, investing in CET results in technology lock-in. The study identified and mapped the decision-making parameters considered while making investment for steel production. It takes the empirical data from the secondary literature and has been validated through the industry expert. The model shows that the variance in the initial investment cost of the technology options could result more investment in CET. The high capital cost for investing in SET would remain a major challenge for achieving the energy transition and would need to be addressed through suitable policy instruments like carbon pricing.