State-owned power producer NLC India is investing heavily in renewable energy as producing only lignite and generating power from it may not be sustainable for long, chairman and managing director S K Acharya told ET.

Earlier known as Neyveli Lignite CorporationBSE 1.54 %, the company recently won a 709 MW solar project in Tamil Nadu and hopes green energy will boost top line growth. It has firmed up a capex of about Rs 17,400 crore for setting up 4,200 MW of green energy generation capacities by 2020 as part of its diversification plan. “Only producing power from lignite is not sustainable in the long run although generation from this fuel will continue to be bulk of its revenue for years to come,” said Acharya.

He said lignite extracted from pits has high moisture content of 30-40%. This makes it unviable to transport the fuel over long distances on rakes. Thus, lignite-based power stations are economic only if integrated power plants are set up at pit heads. So far, we are competitive because we do not have to transport lignite over long distances and all our plants are at pit heads.

The company’s corporate plan says current lignite reserves in Neyveli are 28.31 billion tonnes, which is expected to last for 30-40 years, limiting the capacity expansion in future. Therefore, there is a need to look at newer and alternate resources for fuel as strategic fit to synergise with its existing resources and also to meet its future envisaged capacity expansion. “As part of our green plan, we have recently won a 709 MW project in Tamil Nadu and hope to achieve a total generating capacity of 1,500 MW by next year and around 4,200 MW by 2020. This would include around 3,999 MW of solar power capacity and another 207 MW of wind energy projects,” said Acharya.

“Investment in green energy is likely to be around Rs 4 crore per megawatt for solar capacity while for wind energy it would be between Rs 6 crore and Rs 7 crore per megawatt. We hope to finance these projects from internal accruals,” he said.

The company intends to set up 995 MW of solar generation capacity each at Tamil Nadu and Uttar Pradesh. The plant in Tamil Nadu is expected to be ready by March 2019 while that in Uttar Pradesh would be ready by September 2019.