Coal India Limited (CIL) plans to invest in a 3,000-megawatt solar power project in partnership with state-owned NLC India.
The company also wants to compete in Indian solar auctions and win projects by offering the lowest prices for clean energy.
It marks the turning point for the company, which produces much of India’s coal.
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“Coal as you know, we will lose business in the next two, three years. Solar will gradually take over (coal) as a major energy supplier in the years to come, ”CIL chairman Pramod Agarwal said in an interview with Reuters.
The company’s solar project with N L C India will cost 125bn rupees ($ 1.73bn; £ 1.26bn), and CIL is expected to invest about half that amount by 2024.
The group closed 82 mines in the three years to March 2020, and reduced its staff by 18,600 workers.
Mr Agarwal said he expected further reductions in labor, and the savings could be reimbursed for solar production.
India currently consumes about one million tons of coal annually, making it the second largest consumer in the world after China.
CIL is the country’s largest producer, the company aims to produce 710 million tons of coal by 2020-21, according to India’s coal service.
That’s more than all the US coal companies produced in 2019, according to figures from the US Energy Information Agency.
India hopes to make major changes in its mix of energy in the coming years to help it meet its climate targets.
The country has signed the Paris Agreement on Climate Change, and is committed to reducing its emissions to 35% by 2030 from 2005.
Last year, exports fell for the first time in decades.
Although low emissions were partly due to strong measures to shut down Covid-19, low demand for coal was also a factor.
India hopes to produce 175 GW of renewable energy next year, with a target of 450GW by the end of the decade.