Coal India Limited (CIL) and  Neyveli Lignite Corporation India Limited (NLCIL) have signed a Memorandum of Understanding (MoU) to form a joint venture (JV) company for solar power generation of 3,000 MW as well as thermal power projects totaling 2,000 MW.

The solar projects will be set up across 15,000 acres on the barren and reclaimed free land of Coal India and the estimated cost for CIL’s solar power generation is approximately ₹120 billion (~$1.62 billion).

The projects would be financed through a debt equity ratio of 70:30, according to the Central Electricity Regulatory Commission (CERC) norms.

The JV company will have an equity participation of 50:50 and a timeline of 15 months for completion of solar power projects and 60-month period for TPPs.

“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.

Of late, solar power have become an area of diversification for traditional players dealing with coal mining and thermal generation.

In a February 2018, a Coal India Limited (CIL) commissioned a report that emphasized the uncertainties surrounding the future of coal in India and highlighted the rising significance of renewable power across the country. Renewable energy and storage are seen as likely to emerge as key coal substitutes in coming years, the report noted.

NLC has also diversified in the field of renewable energy. In May 2018, it commissioned 300 MW of grid-connected solar photovoltaic (PV) projects in the state of Tamil Nadu.

In June 2018, NLC received Category I licence from the Central Electricity Regulatory Commission (CERC) for power trading in the country.