Can the world's largest coal mining firm fuel India's solar energy sector?
It’s not a declaration one expects to see: Coal India Limited (CIL) – the world’s largest coal mining firm – are planning to become involved in solar wafer production and to “aggressively” participate in India’s solar energy auctions. In addition, they expect to continue to close some of their smaller mines.
Details of the plan were disclosed by CIL’s chairman, Pramod Agarwal, in an interview with Reuters on March 23rd. CIL’s involvement in the manufacture of solar wafer – a first for India as only solar cells and modules are currently produced there – would be through a joint venture with state-run NLC India. The project is costed at something in the region of 125bn rupees (£1.26bn) with CIL investing about half of the projected amount.
The projects have a capacity of 3,000 megawatts and, if acted upon, would come on line in 2024. In the interview, Mr. Agarwal noted that coal production would decline in the next two to three decades and he foresaw a situation where “solar will take over [from] coal slowly as a major energy provider in the coming years”.
He also revealed that CIL plans to keep closing small mines and refrain from opening any new ones which needed mass recruitment. In the space of three years up to March 2020, the company closed 82 mines and trimmed their workforce by 18,000 employees down to about 272,000.
CIL is comfortably the biggest producer of coal in India which is, in turn, second only to China as the world’s largest consumer of coal. However, this is changing: India has signed up to the Paris Agreement and pledged to reduce carbon emissions by a-third of its 2005 levels by 2030.
As a country, India has reached a crucial juncture in its approach to climate change. Prior to the Covid-19 pandemic, coal was the main source of energy for the country’s fast-growing economy. However, solar PV and wind power had doubled their input into the energy mix with the government focusing on increasing usage of secure, affordable and sustainable energy.
Covid-19 changed things. Whereas many countries sought a green recovery, there was a belief in India that exporting coal was one path out of the economic havoc caused by the pandemic. Prime Minister Narendra Modi signalled intent by asking: “Why cannot India be the world’s largest exporter of coal?” but he also formally inaugurated Asia’s largest solar farm – Rewa Ultra Mega Solar – in July 2020.
India is the world’s cheapest producer of solar power and it is estimated that constructing a solar plant costs about one-fifth less than a new coal plant. Add to that the potential for massive numbers of new jobs in the solar energy industry and it is easy to see why global organisations such as the UN and International Energy Association (IEA) have implored the country to invest in the sector.
Domestically, The Energy and Resources Institute (TERI) – a research institute in New Delhi – added their voice to those of the UN and IEA and made a compelling economic argument to that effect in a report published in February. The report concluded that “even in the short-term, it is optimal from a cost perspective for India to substantially increase the share of variable renewable energy in the total [energy] generation mix”.
CIL’s new plans may yet prove instrumental in directing India towards the renewable energy path.