Bangalore: State-run Bharat Heavy Electricals Ltd (BHEL) and Bharat Electronics Ltd (BEL) will form a Rs.20 billion (Rs.2000 crore) joint venture by March 2010 to manufacture 250mw solar photovoltaic (PV) production facility for processing silicon wafers, solar cells and PV modules, a top company official said Tuesday.

"The joint venture with 50:50 equity holding will be set up where abundant power will be available. We will also rope in an overseas technology partner, which will be given a proportionate stake subsequently," BHEL chairman and managing director K. Ravi Kumar told reporters here on the margins of a function.

Though the location to set up the facility has not been identified, Ravi Kumar hinted Karnataka could be considered, provided the required quality of power was made available to the venture.

As part of the government's green energy initiative, BHEL has upgraded its solar PV module manufacturing facility at its electronics division on the outskirts of the city to 8mw from 3mw per annum at a cost of Rs.160 million (Rs.16 crore). The initial investment in the facility was Rs.150 million (Rs.15 crore).

Dedicating the state-of-the-art facility to the nation, Heavy Industries & Public Enterprises Minister Vilasrao Deshmukh directed BHEL to reduce the cost of the cells through extensive research and greater indigenisation.

"At the present cost of Rs.19 per unit, solar energy from photovoltaic cells is not only cost prohibitive, but also economically unviable. There is an urgent need to indigenise the green technology and lower the production cost to make it affordable to institutional and retail users," Deshmukh said.

The cost of power generation from conventional sources such as hydel is Rs.2-3 per unit, thermal Rs.4-5 and gas Rs.5-6.

Currently, BHEL is importing the raw material (silica) from the US to manufacture the solar-grade mono/multi-crystalline silicon wafers.

"We have been contributing to the application of solar PVs in remote and rural parts of the country over the last three decades. Our grid interactive and standalone solar power plants have been providing energy in Lakshadweep, Sagar islands in West Bengal, Andaman & Nicobar islands and tribal areas of Chhattisgarh and Jharkhand," Ravi Kumar said.

In a bid to reduce greenhouse emissions and dependency on fossil fuels for power generation, Prime Minister Manmohan Singh has advocated increasing use of renewable energy sources such as solar. He has also set a target of generating about 20,000mw or 20gw (gigawatts) from solar power by 2020 under the national solar mission at an estimated cost of $19 billion.