Indian Railways to invest Rs 18,000 crore on solar power units along tracks

Indian Railways is planning to come up with solar power tenders of 4 giga watt (GW) soon.

Indian Railways to invest Rs 18,000 crore on solar power units along tracks

In a bid to cut down on its power purchase costs and utilise the vast stretches of linear land along the tracks with greater efficiency, the Indian Railways is planning to come up with solar power tenders of 4 giga watt (GW) soon. The bids will open up business opportunities of about Rs 18,000 crore for the domestic solar industry that consists of equipment makers and plant installers.

The tender conditions will include certain levels of domestic production, in consonance with the Make in India project.

For the first time, the national transporter will own power generation units, in what could help cut its huge energy costs.

According to sources, the tender, to be invited by Solar Energy Corporation of India (SECI), the government’s nodal agency for solar bidding, is proposed to be issued in two tranches of 2 GW each to be built across 10 states. The framework document for the project, reviewed by FE, proposes that the first tranche would be for solar plants in Odisha, Punjab, West Bengal, Haryana and Rajasthan while the remaining capacity would be set up in Andhra Pradesh, Chhattisgarh, Kerala, Tamil Nadu and Telangana.

The railways currently requires 16 billion units of electricity every year, equivalent to supplies from 12 GW of generation capacity. It spends around Rs 10,000 crore on electricity every year with the average per unit cost being around Rs 6/unit.

In states such as Uttar Pradesh, West Bengal and Rajasthan, Railways pays tariffs as high as `10.52/unit, Rs 9.13/unit and Rs 8.33/unit, respectively, on traction.

As per the conditions for the tender, the 4 GW plan would require developers to build 1.2 GW of domestic solar manufacturing capacity. It may be noted that SECI’s initial invitation for a similar manufacturing-linked solar tender had received tepid response, with developers putting forward bids for only 2 GW capacity against the invitation for 10 GW.

In line with the government’s latest effort to increase electrification of railway tracks, the upcoming solar plants would be designed to use the transmission system built for railway traction — prospectively lowering the tariff of electricity. As on April, 2018,as much as 30,212 route kilometres, or nearly 45% of the total rail lines, had already been commissioned on electric traction.

In September 2018, the cabinet committee on economic affairs had approved the proposal for electrification of the balance un-electrified broad-gauge routes, covering 13,675 route kilometers. Electrification of tracks is expected to reduce diesel-oil consumption by about 2.8 billion litres, resulting in the Railways reducing its energy bill by about Rs 13,000 crore per annum by FY22.

Also read: Sun Pharma share price plunges more than 12% after whistleblower complaints resurface

Indian Railways has been looking for avenues to use its 47,300 hectares of vacant land for commercial purposes, 90% of which is on the sides of tracks. It keep 15-45 metres of vacant land on each side of tracks. Experts estimate that 1.2 km of such land can accommodate 1 MW of solar capacity.

Indian Railways has already provided solar panels on roof top of 19 narrow gauge coaches 23 broad gauge coaches in service. However, these systems work only during sunlight and generates battery backup of approximately 4-5 hours, with several snags during fogs and rain.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.