Uttar Pradesh recently organised its first investors’ summit to showcase the investment opportunities in various sectors of the state. The UP Investors’ Summit 2018 was along the lines of other state investor conferences such as Vibrant Gujarat, Magnetic Maharashtra and Sunrise Andhra Pradesh. The states managed to attract significant investments at these events. The Uttar Pradesh summit also saw widespread interest from investors in sectors such as civil aviation, dairy, electronics manufacturing, tourism, communications, conventional power and renewable energy, film, handloom and textile, agro and food processing and information technology, and in MSMEs (micro, small and medium enterprises).
At the summit, the power sector was in the spotlight given the state’s potential and the challenges faced in this space. In all, 84 MoUs were signed between the state government and the industry, essentially for the development of power infrastructure and renewable energy projects in the state. Of these, 42 MoUs worth Rs 670 billion were signed for the conventional power transmission and distribution system.
Amongst all the sectors, renewable energy attracted the highest potential investment during the summit. A total of 42 MoUs were signed, promising an investment of around Rs 600 billion, mainly in solar power plants. The biggest investors were Avaada Power, which signed an MoU of Rs 100 billion for 1,600 MW of solar projects, and ReNew Power Ventures, which signed a Rs 80 billion MoU for 1,000 MW of solar and 200 MW of waste-to-energy projects. Avaada Power, which was recently in news for winning a large wind power tender, plans to set up solar power projects in Mirzapur, Badaun and Gorakhpur. Meanwhile, rooftop solar company Amplus Solar signed an MoU for Rs 22 billion with the state government to set up 500 MW of capacity over the next five years. In the past, Amplus has developed a major rooftop solar plant for Yamaha Motors India. Apart from this, packaging solutions firm Uflex Limited has announced its plans to set up a solar power project in Uttar Pradesh at an investment of Rs 12 billion. These announcements augur well for the state as they will help accomplish its ambitious solar plans of setting up 10.7 GW solar energy capacity over the next five years.
According to Brajesh Pathak, minister of additional energy resources, Government of Uttar Pradesh, the state needs to tap the solar energy potential in areas like Bundelkhand. “The state government has already framed policies, and is giving subsidy to solar power developers,” Pathak said in a session titled “Renewable Energy: Opportunity Unlimited”. Meanwhile, in his presentation on Uttar Pradesh’s Solar Policy, 2017, Alok Kumar, principal secretary, energy and alternative energy, stated that against its total potential of around 23,000 MW, the state has till date been able to harness 500 MW only. The state government has now floated tenders for setting up solar power plants aggregating 1,000 MW. “Discoms will have to buy at least 42 billion units of power from renewable sources in a year against the 3.5 billion units that they purchase today,” he said.
Further, Rajnish Kumar, a State Bank of India official, suggested that renewable energy tariffs should be rationalised otherwise it would not be viable for developers as well as buyers. The concern stems from the state’s earlier record of attracting higher than average national solar tariffs and subsequent negotiations with bidders. In fact, it must be noted that six solar projects totalling 80 MW have been in limbo since 2015 over tariff terms. The Uttar Pradesh government had signed agreements for 16 projects in 2015 to supply 215 GW of power to the state. However, these plans were thwarted by disagreements between the government and developers over the tariffs quoted by the winning bidders. In November 2017, the Uttar Pradesh Electricity Regulatory Commission (UPERC) and the 16 developers agreed to adopt a renegotiated tariff of Rs 7.02 per kWh for the projects that had already been completed. Nine projects totalling 135 MW have been commissioned so far while the remaining six projects with a combined capacity of 80 MW are yet to be commissioned and are likely to be subject to the recently negotiated rates. In its latest proposal, UPERC has suggested adopting a tariff of Rs 5.21 per kWh for the first 12 years for these projects. Such situations need to be avoided if the state has to achieve its set targets.
In sum, though events like these grab attention, little happens after that. For example, Vibrant Gujarat, held biennially since 2003, makes news for attracting MoUs running into astronomical amounts, but the actual investment flow is reportedly 5 per cent of the promised amount. Thus, only time will tell whether the impressive numbers promised at the UP Investors’ Summit 2018 will translate into reality and script a new history for the state.