Indian downstream oil companies are the latest to express interest in developing large-scale solar power projects to meet electricity demand.
Two of the leading oil refining companies in India — Indian Oil Corporation and Oil India — are planning to set up 1 GW of solar capacity in state of Madhya Pradesh to power their operations. The capacity will be set up in the form of a solar park, which is becoming increasing popular in India these days, and will help the government-owned companies meet their renewable purchase obligations.
The plan by the two companies seems to be in line with similar announcements by other public sector companies, including Coal India, NALCO, Indian Railways, andNeyveli Lignite Corporation. The central government has directed several entities to set up large-scale solar power projects on surplus land.
The government also recently launched its ‘solar zones’ policy. As per the policy, ten zones of 10,000 hectares each will be identified across the country for setting up an estimated 25 GW of solar PV capacity. The land will be offered to interested project developers to set up large-scale solar projects. The oil refineries may use this new policy to set up their solar parks.
Over the last few months, several entities across the country have express intentions to source electricity from solar projects. With the steep fall in tariff bids, they hope to sign long-term power purchase agreements (PPAs) with solar projects and bypass rising coal-based power costs. Solar PPAs will also help them fulfill their renewable purchase obligations.