Coal India Limited (CIL) recently announced its foray into the Indian solar power sector with an initial project of 2 MW (refer).CIL is the largest coal mining company in India and accounts for 80% of the coal production in the country.

• CIL plans to set up solar power projects in Ranchi and at company owned coal mining areas in order to reduce existing electricity bills
• Additionally, Neyveli Lignite Corp and Oil India Limited are actively venturing into the solar market
• A capacity of 2.3GW, driven by commercial parity, is expected to be installed by 2016.As solar power becomes more viable, the shift of at least a certain percentage of consumers to distributed generation is inevitable

The company has said that this project will help them save on their energy bills. The project is to be set up at the company’s Central Mine Planning and Design Institute located in Ranchi, in the Indian state of Jharkhand. In addition, the company plans to set-up installations at the company owned coal mining areas and staff colonies to reduce its existing energy bills. Neyveli Lignite Corp, another publically owned coal mining company, is also actively venturing into solar power generation by setting up a 10 MW project. Recently, Oil India Limited (OIL), India’s oldest and biggest oil exploration and production company, also announced its foray into the solar sector. OIL is actively looking at project development and investment opportunities. State level conventional power companies such as Karnataka Power Corporation Limited (KPCL) and Gujarat Power Corporation Limited (GPCL) have already set up solar projects in their respective states.

The foray of conventional power companies into solar carries a notable underlying message. Firstly, that solar power provides viable business opportunities for companies. Secondly, as in the case of CIL’s foray into solar, that solar power can also help save on energy costs. This is expected to be a key driver for solar PV in the years to come. BRIDGE TO INDIA expects a capacity of 2.3 GW driven by commercial parity to be installed by 2016. Thirdly, these companies realize the potential for solar and do not want to miss the bus on the business opportunities arising from this potential.

In Germany, for example, distributed generation of power using solar PV has taken a significant share away from conventional power sources. A similar story has started to play out in the US. In both these places large conventional power companies and power distribution companies have not been able to successfully capitalize on this shift. Instead, some have even been openly against it. As solar power becomes more viable, the shift of at least a certain percentage of consumers to distributed generation is bound to happen. Now, the choice is in the hands of conventional power majors whether they want to capitalize on this potential to their benefit or resist the shift.

This post is an excerpt from this week’s INDIA SOLAR WEEKLY MARKET UPDATE. Sign up to our mailing list to receive these updates every week.

You can view our archive of INDIA SOLAR WEEKLY MARKET UPDATES here.

What are your thoughts? Leave a comment below.