Coal India's 1,000-Mw solar project may help it save 30% power costs

This will save the company at least 30% of its expenses on power and fuel

State-owned miner Coal India has embarked on a project to generate 1,000 megawatts of solar energy to save 30 per cent of its power and fuel expenses.

Coal India paid a Rs 2,347-crore power bill in 2014-15 and another Rs 1,860 crore during April-December 2015. Coal India’s power costs have risen seven per cent during the first three quarters of the current financial year in comparison to the year-ago period.

Under the present cost structure, once completed, the solar power project is likely to help save Coal India at least Rs 750 crore a year.

Further, through a recent viability-gap funding scheme, a one-time grant of Rs 1 crore per megawatt (Mw) of solar power will be provided for this project by the Centre.

• 7% Amount by which fuel costs for Coal India during April-December rose
• Rs 750 cr Coal India will save per year on the back of the solar project
• Rs 1,000 crore Maximum amount Coal India may get under the VGF scheme, if it uses local solar panels
• 1,000 Mw  Size of the solar power project. Dependency on discoms will reduce after project kicks in

“The cost of each unit of power varies between Rs 4 and Rs 11. On average, it is Rs 7.5 and rising every two years. Solar energy will allow us to produce and use cheap electricity and lessen our requirement from power companies,” a Coal India executive told the  Business Standard.

Bidding to set up a 200-Mw solar power plant in a company area in Madhya Pradesh will be conducted shortly.

An MoU (memorandum of understanding) with Solar Energy Corporation of India has been signed, which is guiding Coal India through the process.

According to the company executive, Coal India needs 900 Mw of power to carry on its operations. “While the project will definitely reduce our energy demands from power distribution companies, the dependence won’t go away entirely. Using solar energy to light bulbs or use in appliances is one thing and conducting mining operations entirely on it is very different and complex,” he said.

However, the company is yet to take a call on issues like power banking, distribution of the solar output, policies on power sourcing from distribution companies, and other processes.

The project cost, previously estimated at over Rs 7,000 crore, reduced 28.5 per cent as on December 2015. The cost will come down further as more accurate plans are being chalked out. “For some solar power units to be constructed after the bidding, we want the construction and procurement company to acquire the land. In other cases we have the land with us,” he said.

Presently, Coal India's potential solar-power areas are in Maharashtra, Chhattisgarh, Odisha, Jharkhand, Madhya Pradesh, West Bengal, and Assam. The projects are likely to come up in these areas.

The Maharatna company has also undertaken a technical and commercial feasibility study based on which it will take a call on how the project will be funded.

“The report is awaited next month. Based on it, we'll decide if we will go for internal funding altogether or opt for loans,” the official said.

Coal India has installed 2.2-Mw solar power projects in two of its subsidiaries in Mahanadi Coalfields and Central Mine Planning & Design Institute.