Coal Company To Set Up Solar Power Projects For Indian Railways

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As absurd as the headline of this article may sound, it is true and is a direct result of the Indian government’s push for public sector companies to invest heavily in renewable energy technologies, especially solar power.

The Minister of Railways in India recently announced that coal mining and thermal power generation company NLC India will set up solar power projects on land as well as atop roofs of platforms for Indian Railways. According to media reports, the two entities — the government having a majority stake in both — have agreed on the terms of an agreement to implement the program but have yet to officially sign a pact.

Indian Railways has large swaths of unused land which can house large-scale solar power projects. As per the proposed agreement, NLC India will set up utility-scale solar power projects at unused land parcels and sell the power generated to Indian Railways. It is unclear if NLC would develop the solar power projects in-house or auction them to other solar power project developers. NLC India may seek help from the Solar Energy Corporation of India to auction the projects.

Indian Railways being the off-taker of the electricity generated, solar power projects would very likely place highly competitive bids for these projects. This will benefit all stakeholders, including banks that may lend to the developers.

Indian Railways currently uses costly diesel or electricity to power its locomotives. For electricity, the Railways is made to pay substantially higher tariffs by distribution companies across India. With a planned solar power capacity of 5 gigawatts, Indian Railways could meet a fourth of its energy needs, translating into huge financial savings.

The Railways is planning to set up a solar power park of 700-800 megawatt capacity in the state of Madhya Pradesh on the lines of the Rewa solar power park. The bids of this solar park will likely be called by SECI. The Delhi Metro Rail Corporation has already signed an agreement to procure 24% of the electricity generated from the 750 megawatt Rewa solar power park.

Apart from utility-scale projects, NLC will also set up rooftop projects for the Railways. The Ministry of Railways plans to install rooftop solar power systems at more than 7,000 of India’s railway stations. According to an update by the Ministry of Finance in February this year, work on 300 stations has already begun.

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An avid follower of latest developments in the Indian renewable energy sector.

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