Coal India Signs Pact with NLC. A sign of the future?

Coal India has signed a pact with NLC India Limited to generate power from renewable (Solar) and conventional (Thermal) sources. The joint venture will set up 5000 MW of power generation capacity, of which 3000 MW will be powered by Solar while the remaining 2000 MW will be coal fuelled Thermal power.

CIL and NCIL signed the Memorandum of Understanding yesterday for setting up the 50:50 joint venture, which will undertake the project. The cumulative investment in the projects is estimated to be around Rs 12,000 crore, according to sources close to the company. This has been made possible thanks to the readyaccess to coal as well as land for the solar projects.

In a statement, Coal India said there were two reasons for the joint venture. First, the PSU is looking to increase its own consumption of renewable power and second, it is exploring the possibility of power plants at the top of its mining shafts where costs will be low, since land acquisition costs will be zero. Solar projects will be set up over 15,000 acres of identified barren and reclaimed free land of Coal India and also at locations where free land is available. Another reason why the PSU is pushing heavily for renewables is because it has been tasked to become a net zero emission energy company by the Ministry of Coal.

The joint venture has set a deadline of 15 months to complete the solar power project and 48 months for the thermal power project that will be set up at Sundergarh district in Odisha, implemented through CILs subsidiary Mahanadi Coalfields. The projects will be financed through a debt equity ratio of 70:30, according to Central Electricity Regulatory Commission (CERC) norms. The companies are working on a concept paper that will be submitted to their boards for a clearance.

“This is a synergistic step, combining the resources of both the companies for a common goal. Coal India will be riding the core technical expertise of NLC in thermal power generation and solar PV power,” a CIL official said.

At the company’s annual general meeting held last month, Anil Kumar Jha, Chairman of Coal India had informed that the company is working on building a capacity of 3 GW in Solar power. “The company is aware of the importance of environmental issues and ties to the extent possible to restore the environment and nature to its original pristine condition,” Jha said in his speech.

Slowly over time as more and more CIL coal fields are shut down, a large amount of owned and barren land will become available and as this initiative suggests CIL will do well to convert those barren lands into renewable energy hotspots, or so it should. It might also help if the government, rather than gentle prodding to mining firms, makes it mandatory for them to use renewable energy preferably 100% by 2025. Currently, the trend of firms pledging to shift by random deadlines is meanigless, with no penalties for failure to meet these so called pledges, besides no pressure to really go the extra mile and do it for reasons besides cost savings, ie, sustainability.

Interestingly, the world’s largest floating solar plant in the Anhui Province of China, floats on a man-made lake on the site of an abandoned mining field. An area of interest for CIL, the government and countries across the world as power transitions from coal to renewable.

Read: Moody’s Report: India to have 18% of renewable energy in electricity generation mix