New Delhi: Indian Railways is planning to set up a renewable energy capacity of 1,200 MW and a transmission system to carry the power generated in an attempt to cut its power costs.

The national carrier is also conducting an energy audit to estimate the amount of savings that can be made. Railways needs about 12 billion units of electricity a year, with consumption growing at an average 5% a year. Its power bill is estimated at ₹ 12,500 crore for the current fiscal year.

The equipment for the green power capacity will be sourced from domestic manufacturers with about 1,000 MW to be produced from sunlight and the rest from wind. The exhaustive rail network of the national carrier gives it the right of way, which in turn makes it easy to set up electricity transmission link.

The Railways also plans to source 10% of its electricity demand through renewable energy sources by 2020, said A.K. Mittal, chairman, Railway Board, at the signing of four agreements between the ministry of railways and the ministries of power and renewable energy on Wednesday.

These agreements are for cooperation in electricity transmission, energy efficiency and promotion of green energy.

The national transporter plans to build a transmission network as per the recommendation of the Central Electricity Authority, India’s apex power sector planning body, said Navin Tandon, member, electrical, Railway Board.

“The MoUs provides a framework under which both parties may collaborate and cooperate for efficient, reliable and economical generation, transmission, distribution, trading, supply, marketing of electricity and energy efficiency in Indian Railways," the government said in a statement.

Piyush Goyal, India’s minister for power, coal and renewable energy, said that the partnership between his ministries and the Railways has very ambitious targets to cut the cost of power.

Goyal said all equipment will be domestically sourced, which will give boost to government’s programmes like Make in India, Skill India and will create jobs.

The plan to use domestic equipment comes in the backdrop of an ongoing trade battle with the US at the World Trade Organization (WTO), where a dispute settlement panel has been established to hear US complaints against India’s domestic content requirements on procurement of solar cells and modules under the Jawaharlal Nehru National Solar Mission programme (JNNSM).

The Railways is trying to take advantage of its position as the largest consumer of power in the country to bring down its electricity costs. It has also called for bids from power producers to supply 1,010 MW of electricity over three years, Mint reported on 17 July.

Indian Railways has floated the tender through Railway Energy Management Co. Ltd for sourcing electricity in the eastern region (350 MW), west (440 MW) and north (220 MW).

By calling for competitive bids, the railways expects to benefit from lower tariffs. The transporter is seeking to reduce its electricity cost to less than ₹ 5 per unit from the present average of around ₹ 7 per unit. The national transporter plans to reduce electricity bills by nearly one-third by seeking competitive bids from power producers, sourcing from electricity exchanges and reaching bilateral arrangements. This plan was articulated in this year’s railway budget.

Railway minister Suresh Prabhu said that the railways was paying the highest tariff despite being the largest consumer.

“The idea is that we must buy electricity on our own. The agreements will deal with all these aspects," Prabhu said.

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