Hurdles in the Way

Implementation challenges in solar park development

Nearly 20 cent of the country’s solar installed capacity target for 2022 is slated to come from solar parks. These parks have a number of solar power projects with a cumulative capacity of over 500 MW, typically concentrated on a designated piece of land and built and operated by various developers. The infrastructure required for solar power generation and evacuation is developed by implementing agencies designated by the government, with a focused intention of providing ready infrastructure to developers. The Solar Energy Corporation of India (SECI), on behalf of the central government, along with the state government where the park is located, is in charge of implementing the solar parks scheme. The scheme was launched by the Ministry of New and Renewable Energy (MNRE) in 2014-15, with a framework for the development of solar parks till 2018-19.

The concept behind solar parks is to promote solar energy development by providing an exclusive zone for setting up solar projects in order to fast track capacity addition. The solar park concept is characterised by well-developed infrastructure such as the transmission system, site access, water availability and communications network, which enables low gestation periods and minimises the risks associated with solar power projects. Solar parks are helping the states to attract investments and meet their solar purchase obligations. Also, these parks are expected to encourage local employment and reduce the carbon footprint. However, there are several hurdles in im-plementation. These range from land, cost and financing issues to load balancing and power evacuation.

Renewable Watch takes a look at the key challenges faced in the development of solar parks…

Land and infrastructure

Solar power projects require huge portions of land. Typically, about 5 acres of land is required for a 1 MW solar power plant and the requirement rises in direct proportion to the capacity of the plant. Therefore, for an average sized solar park of 500 MW, about 2,500 acres of land will be required. The identification and acquisition of land of this magnitude in a concentrated region is one of the biggest challenges for solar parks. The land must be non-agricultural, unused and free of trees, and it should receive good irradiance. The use of government land is encouraged for this purpose as it minimises the project cost. However, this may not always be feasible and acquisition of private land may become necessary. While the acquisition of government-owned land poses bureaucratic hurdles, cost becomes a major issue in the case of private land. Sometimes the layout of the land and the stretch demarcated for the park turn out to be different from what was proposed. For instance, a 4,000 MW solar park in Rajasthan was delayed when about half of the land was found to be part of a lake that gets inundated during the monsoon. The Charanka Solar Park in Gujarat also faced similar issues in identifying a continuous 5,400-acre stretch of land. Only 2,669 acres of government land was available in pockets. The problem was solved by involving engineering consultants that prepared a master plan that utilised the pockets optimally for solar plant erection by different developers.

Another issue that delays the development of solar parks is the lack of infrastructure at the site as mandated by the implementing agency at the time of providing land to developers. Solar parks are usually developed in remote areas lacking in even the basic infrastructural facilities. The implementing agency charges a premium from developers for providing facilities such as road, water and power evacuation lines, thereby enabling them to quickly commission the installed capacity. However, most of the infrastructure is developed in parallel with the projects and end up being completed along with them. Not only does this delay the commissioning and grid integration of the installed power plant, but also increases the project cost as the developer ends up paying for facilities that were not made available when they needed them.

Balancing supply and demand

India’s power demand follows a pattern of peaking during the day and the evening, and reducing during the night. Load balancing is done through supply variation from coal, gas and hydro power plants that have flexible mechanisms in place. The baseload is met from generation by coal-based power plants, while anything over and above that is met through both coal and alternative sources of power. The onus of balancing the demand on the grid is on the state utilities. As the integration of power from solar parks grows, the problem of balancing the load will become more pronounced, considering the variability and uncertainty associated with solar power. Proper scheduling and forecasting will be required to understand the extent to which other sources of power generation must be run in conjunction with the intermittent generation from solar parks.

Power evacuation

The remote location of solar parks makes the evacuation of power a considerable challenge. The grid is often inaccessible from these areas and when it is accessible, the aggregate technical and commercial losses are high. Transmission lines from the site to the grid must be set up for evacuation of power without losses. The green energy corridors being built for power transmission between states will also help overcome this challenge. However, it is necessary that proper infrastructure is available before solar plants are constructed in the parks for avoiding delays due to inadequate evacuation infrastructure.

The Charanka Solar Park developers initially found power evacuation to be a major issue. Not only was the grid for evacuation unavailable but there was no power for consumption during construction. The Gujarat Electricity Transmission Corporation overcame these challenges by installing 66 kV and 220 kV substations along with transmission lines for the evacuation of power with minimum losses.

Financing

Solar parks are highly cost intensive. Huge costs are incurred by the implementing agency during the development of the park, which is recovered by giving the project site to developers at a premium. For the development of solar parks, MNRE provides financial support of up to Rs 2 million per MW or 30 per cent of the project cost, including grid connectivity, whichever is lower. Therefore, for a total of 20,000 MW envisaged for solar park development, MNRE has estimated the cost to the government to be Rs 40.5 billion. The remaining amount can be met through loans provided by commercial banks. However, they charge higher rates of interest for renewable energy projects as compared to those charged in developed countries.

Despite the support provided by the government, access to financing for the rest of the project cost is a challenge for the solar energy segment. Only recently, new financial mechanisms specific to renewable energy, such as green bonds and the Clean Energy Fund, with more conducive terms for developers have been introduced to accelerate the installation of renewable energy capacity.

Cost issues

The cost incurred by developers for setting up plants in solar parks is high. Consequently, the power produced becomes more expensive by Re 0.20-Re 0.40 per unit. With delays in the development of park infrastructure, the cost incurred by developers often works out to be more than that of buying individual land and setting up their own evacuation infrastructure. The cost issues and delays seldom justify the more expensive power generated from these parks, the cost of which is further passed on to discoms through power purchase agreements.

Centralisation of power

Solar power has found success in the recent past owing to the fact that it provides decentralised power at the site. This helps avoid the transmission and distribution losses. Considering that India has among the highest transmission losses, in the range of 25-30 per cent, the centralisation of power in solar parks could lead to the same issues.

Conclusion

Solar parks have been well-received as a concept but there are multiple challenges associated with their execution, especially considering the huge capacity and cost of solar parks. However, this has done little to dampen their popularity and the government is considering doubling the capacity of solar parks to 40,000 MW. The key to the success of solar parks lies in the fact that the government enables the implementing agencies to overcome execution challenges and provides the required infrastructure before developers start construction.

By Ashay Abbhi

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