Coal India Ltd, which is betting big on solar power generation with a view to diversifying its portfolio, is looking to set up a Special Purpose Vehicle (SPV) for the same.
The country’s largest coal miner plans to generate close to 3,000 MW of solar power by 2024 at an estimated investment of around Rs 13,500 crore, a senior company executive said. While part of it would be funded through the company’s internal accruals, the remaining would be met through the SPV and bank loans.
The exact nature of the SPV and the partners are being worked out.
“Solar power will replace coal as a key energy provider in future and to remain relevant in the energy sector it is imperative we venture into solar power generation, which we are doing,” the official told BusinessLine.
The foray into solar power would help the company remain relevant in the energy sector and would also serve as an alternative green energy source.
CIL is developing necessary in-house expertise and has created a team of competent officers for its solar power initiatives, he added.
Coal India, which recently won a 100 MW solar power bid in the auction held by Gujarat Urja Vikas Nigam Ltd, would look forward to participating in more such auctions to ramp up its solar power initiatives moving forward.
“The company will participate more vigorously in the country’s solar energy auctions in future,” he said.
Growing importance of renewables
While coal continues to be the dominant primary commercial energy provider of the country, at least for the next two to three decades, however, renewable energy sources are expected to catch up fast, with solar power in the lead, eventually reducing coal’s share in the country’s energy basket, a recent KPMG report suggests.
For now, coal-based power is integral to catering to base load in the country, till affordable storage comes up on a major scale. Currently, the variable cost of thermal power, per unit, favourably outweighs the effective cost of solar. But this may change in future.
Of the total renewable energy generated in the country till February 2021, solar power accounted for 42 per cent at 39,084 MW.
In a modest way, CIL has already commissioned solar power generation and its subsidiaries generated 4.6 million units in FY-20 and 4.25 million units in FY-19. This amounts to a reduction of over 3,000 tonnes of carbon dioxide emissions each year, as one million units of solar power generation brings down carbon dioxide emissions by a little over 700 tonnes.