Kerala government is planning to auction more than 50,000 solar power plants in the state and other parts of the country, which could result in the sale of electricity to more than 1 billion people.
The state has already started the process of privatising some of its power generating plants.
The power auction, expected to be held from February 27 to March 4, will take place at a cost of Rs. 1,100 crore ($1.2 billion) for the public sector and Rs. 2,000 crore for private companies.
The government is looking at selling the state-owned plants, including the three coal-fired power plants.
The companies are currently being privatised under the State Power Supply Corporation (SPSC), which is part of the state government.
The SPSC is run by the Centre, and its assets are owned by the state.
Kerala has become a model state for privatisation.
The Centre had started the scheme to privatise state-run power companies in 2012, and the SPSC was launched in 2013.
The new government in the western state of Kerala has been looking at a number of projects for the electricity sector, including a solar project at Thiruvananthapuram.
In December, the government announced the launch of the Solar Energy Project Development Fund (SPDPF), a government-to-government development scheme to help companies invest in solar projects.
The solar projects have not yet been completed.
A spokesman for the SPDC told Reuters that the funds would be used for the development of solar projects and the sale to private buyers.