Bangalore: Engineering and construction company Larsen and Toubro Ltd (L&T) plans to enter solar power generation and expand its offering in the green energy technology business that includes nuclear and hydel power.

Renewable sources: A.M. Naik, chairman of L&T, said his firm is in talks with two companies to make machinery for solar panels. Ashesh Shah / Mint

L&T is in talks with two firms to make machinery for solar panels, Naik said, but declined to elaborate.

Environment-friendly energy technology has attracted firms including Wipro Ltd, Tata BP Solar India Ltd and Reliance Industries Ltd.

Global interest in renewable energy such as solar and wind power has grown in recent years because of rising crude oil prices, which touched a peak of $147 (Rs7,173.60) a barrel in July before starting to decline.

Subsidies announced by the Indian government this year for firms that generate electricity from solar panels are also an incentive for companies to enter green energy technology.

In 2007, L&T set up L&T Power Projects Ltd, an investment arm for all its power projects, and L&T Power Development Co. Ltd, a subsidiary that will execute coal-fired and multi-fuel power plants in the country.

According to consulting firm Frost and Sullivan, the installed capacity for solar power plants in India was 4.8MW in February. This is expected to increase to 1,000MW by 2017, according to a government panel on solar energy.

Maturing technologies such as photovoltaic cells and solar thermal power generation (an alternative to coal-based thermal power plants) make it timely for firms such as L&T to set up renewable energy projects and win carbon credits, said an analyst.

Companies that shift to cleaner technologies that reduce greenhouse gas emissions win carbon credits that they can sell for a price.

“L&T can reduce its carbon footprint and it is also a good business opportunity," said Shirish S. Garud, a scholar in renewable energy technology applications at The Energy and Resources Institute in New Delhi.