One of the major cost components of operating a railway network is the energy bill, which accounts for about 8 per cent of the total working expenses of Indian Railways (IR). The large scale of operations as well as the requirement of uninterrupted power supply makes railways an energy-intensive sector. At present, IR’s total energy consumption is about 18 billion units (including both traction and non-traction requirements) entailing an expenditure of about Rs 1,230 billion. In the times ahead, its energy consumption is expected to grow at 6 per cent per annum.
To meet the increasing energy demand (commensurate with network expansion, electrification, and the introduction of new trains), IR is taking initiatives to enhance its energy efficiency, build more renewable energy capacity, reduce carbon/emission footprint and its energy bill, and diversify the energy sourcing mix.
In renewable energy, solar, wind, and solar-wind hybrid solutions are being sought to meet the tall targets set for greening the sector. By 2020-21, IR plans to set up 1,000 MW of solar and 200 MW of wind power capacity.
As IR is the largest landowner in the country, it has immense potential to tap land-intensive solar power. According to government estimates, at present, about 51,000 hectares of land is lying vacant along the railway tracks. Thus there is potential to set up 20,000 MW of solar-based renewable energy facilities. At present, IR requires 10,000 MW to meet its power requirements. In terms of investment opportunities too, the segment is lucrative. There are promising prospects for equipment manufacturers and solar plant developers to invest in these projects.
Financing for solar projects
To develop 10,000 MW of solar-based generation capacity on vacant railway land, investments of over Rs 400 billion would be required. Execution of such projects with funding from IR’s internal accruals will not be possible as these funds will be required for the development of core infrastructure.
Thus, an alternative mode of financing is being adopted. In this arrangement, the renewable power developer has to establish the solar plant with its own funds and has to maintain the facility. IR, on its part, provides commitment to buy the power for a period of 25 years at a fixed tariff without any escalation. Tariff is discovered through e-reverse bidding with a cap on the tariff. Currently, there are three pilot solar-based projects that have been taken up.
While the concept of greening IR is sound and progress witnessed so far has been encouraging, there exist pressing concerns that need urgent government attention. Policy solutions can be formulated to address the capacity restriction of 1 MW on rooftops, solar plant capacity restriction to 50-80 per cent of contract demand/sanctioned load, high transmission charges, and the need for separate transmission corridors to be booked irrespective of source of generation. Meanwhile, technology interventions and advancements are the need of the hour for developing efficient storage solutions.
Decarbonisation of IR is in line with national and international commitments to reduce carbon emissions. However, much needs to be done to meet the tall targets set by IR. Framing new policies and adopting new and advanced technologies will be required from time to time to meet the energy requirements of IR through green means.