A new mechanism, aimed at driving up the extent of solar power capacity in India, has been initiated by the Indian government.

Prime Minister Narendra Modi’s government has ordered some of the country’s oldest coal-fired power plants to help make solar farms more competitive by bundling together electricity from both technologies for sale to the grid.
Prime Minister Narendra Modi
The order from the Ministry of Power says plants “that complete 25 years shall be used for solar capacity being established by NTPC.” NTPC will set up 15 gigawatt solar plants by 2019 under the program, according to a transcript of an earnings conference call released on its website in the last week of August.

The decision requires state-controlled NTPC to sell cheaper coal power along with more expensive solar as a single unit. The effect of the order, which was released to industry officials and seen by Bloomberg News, is to reduce the price distribution companies pay for solar power and force them to take more of the cleaner form of energy.

“The lower price ensures the competitiveness of this power in the wholesale market, thus easing the search for alternative buyers,” said Bharat Bhushan Agrawal, a solar analyst for Bloomberg New Energy Finance in New Delhi.

The programme will help persuade distributors to buy solar power and support Modi’s goal of having 100 GW of solar capacity by 2022, up from less than 4 GW now.

Singrauli in North India is the first coal plant to take part. The 1700 MW unit’s output will be sold along with power from 3 GW of solar installations, the power ministry order said.

The order prevents the aging plants from depressing wholesale prices by selling their power into the market without solar energy included.

India’s clean energy sector is struggling with the reluctance of electricity distribution companies, saddled with over 2.5 trillion rupees of losses, to buy more expensive green power.