Coal India wins 600MW solar project in Uttar Pradesh

Coal India Limited has won a 600-megawatt solar project in Uttar Pradesh. The state-owned coal miner will set up the plant under the Central Public Sector Undertaking (CPSU) scheme, which mandates the use of domestically made solar cells and modules.

The project was awarded through a competitive bidding process. Coal India will develop the plant in the Jhansi district of Uttar Pradesh. The company has not disclosed the exact tariff or the total investment yet.

This is Coal India's largest solar win to date. The company has been trying to shift its image from a coal giant to a cleaner energy player. It has set a target to install 3 gigawatts of solar capacity by 2024.

The CPSU scheme is run by the Ministry of New and Renewable Energy. It aims to build grid-connected solar projects using Indian-made equipment. The scheme gives a viability gap funding to state-owned companies to make solar power cheaper.

Uttar Pradesh has become a hot spot for large solar projects. The state has over 2 gigawatts of installed solar capacity. The new Coal India plant will add to that number and help the state meet its renewable purchase obligations.

Coal India's move into solar is part of a bigger trend. Indian coal-fired power plants are struggling with rising coal prices and pollution norms. The government wants state-run companies to diversify. Coal India alone produces over 80% of India's coal. Its shift to solar sends a strong signal.

The project will be built on a build-own-operate basis. Coal India will own the plant and sell the power to state distribution companies. The company has not said when construction will start or when the plant will be commissioned.

Solar power tariffs in India have fallen sharply in recent years. They now hover around Rs 2.50 per kilowatt-hour for large projects. That is cheaper than coal-fired power in many states. The CPSU scheme helps bridge the gap for projects that use Indian cells and modules.

Domestic solar manufacturing is a key policy goal for the Indian government. It wants to cut imports of solar cells, mostly from China. The CPSU scheme is one tool to push that. Another is a basic customs duty on imported solar modules and cells.

Coal India's solar push is still small compared to its coal business. The company mined over 600 million tonnes of coal last year. But the 600-megawatt project shows it is serious about building a clean energy portfolio.

Other state-run firms like NTPC and SJVN have also won solar projects under the CPSU scheme. The government wants to add 40 gigawatts of solar capacity through state-owned companies by 2026.

For now, Coal India has one big solar project in hand. Whether it can hit its 3-gigawatt target depends on how fast it can win and build more.