Ground Realities

Land issues continue to constrain renewable energy growth

In what can be termed as the first significant move towards resolving the issue of land constraints for renewable energy project development, the Government of Gujarat has released its land policy for such projects. The new policy mandates that all future solar, wind and solar-wind hybrid projects will have to be built in parks allocated for such systems. Gujarat, which is home to several solar parks, intends to avoid scattered project development across the state and make evacuation feasible and convenient. According to the new policy, an area that can host 30 GW of renewable energy generation capacity will be sanctioned for parks, each park large enough to house a minimum of 1 GW of capacity. Of the 30 GW, a third would be set aside for projects initiated by state PSUs.

However, a key question that now arises is whether the new policy will help clear the logjam for wind projects that were held up due to the state’s reluctance to release land for projects auctioned by the Solar Energy Corporation of India (SECI). From what it appears, land leasing for these projects will not be as easy as the policy states it to be.

In 2018, SECI auctioned 4.5 GW of wind power projects under Tranche III (March), Tranche IV (June) and Tranche V (September), wherein developers had the option to set up plants anywhere in the country. The majority of winners decided to locate their projects in Gujarat because it is the second highest wind-rich state in the country after Tamil Nadu, where high- and medium-wind sites have been mostly occupied.

However, until the new policy was announced in January 2019, the Gujarat government kept refusing land transfer approvals for wind projects to be set up in the state, other than those backed by Gujarat Urja Vikas Nigam Limited (GUVNL), for several reasons. One was the government’s concern that various parts of the state would be scarred by transmission lines. Two, these projects would be connected to the interstate transmission system (ISTS) and could thereby supply power anywhere in the country, whereas the Gujarat government preferred to lease land for only wind projects auctioned by GUVNL and whose power would be provided to Gujarat alone.

Meanwhile, hoping that the issue would be resolved sooner or later by SECI, developers tied up with land aggregators such as Suzlon and Inox, placed orders for wind power equipment, signed construction contracts and laid transmission lines. While developers, on their part, tried to aggregate transmission lines and pooling stations in order to be cost efficient, with the new policy, they face uncertainty over getting lease approvals for their projects. Some of the bidders tried to overcome the challenge by buying private land but, owing to the growth of wind projects, premium wind sites in Gujarat have become scarce and expensive, making it unviable to develop projects at the quoted bid prices.

According to industry sources, the minister of power has written to the chief minister of Gujarat several times to resolve the matter but with no success. SECI has also given a two-month extension to project developers on these grounds and may have to give a further extension if the issued are not resolved. However, there are concerns that if the matter is questioned on legal grounds, the bids may have to be cancelled. Until then, these power projects stand stranded.

This is not the first instance of project development being delayed due to land-related issues. In fact, in the solar power segment, this is one of the major criticisms levelled against the government that it rushes to auction projects in solar parks even before completing land acquisition formalities, let alone infrastructure development around it. This has led to major issues for investors and project developers, who end up winning bids but then find that the infrastructure is not ready for them to start construction. In the Pavagada, Charanka, Bhadla and Kadapa solar parks, bid submission deadlines for tenders have reportedly been extended repeatedly.

The Pavagada Solar Park was conceptualised in February 2015 and development began in January 2016. The solar park is spread across 13,000 acres and convincing people to give up vast amounts of their land for project development was challenging. “It took us a few months to convince the people. The state government could have easily vacated the land, but we believe that true development is only possible when everyone benefits. So, we took it upon ourselves to convince all the villagers that leasing out the land for 25 years was in their own interest and that the land would still belong to the families. It took us some time of course, but by October 2016, we had reached an understanding with everyone,” said a KSPDCL official in a media statement. In 2017, grid-connected solar projects totalling 400 MW were commissioned. So, the process of conceptualising the park, acquiring land and developing the required infrastructure (transmission lines, pooling stations, access roads, water facilities, etc.) for those projects took over two years.

But the problem runs even deeper. Even today, there are reports of farmers in Pavagada district being compelled to give away their lands at very low rates. Some reports claim that Pavagada was the groundnut bowl of Karnataka and post the acquisition of their land, farmers have been left totally unemployed. Activists are also arguing that large solar parks like the one in Pavagada should not be constructed without carrying out environmental impact assessments.

As a solution to curb the use of fertile land for setting up projects, some industry experts suggest that only wasteland be used to set up large renewable energy parks. However, there have been instances where it has been difficult to develop even wasteland as solar parks due to issues related to property rights. The most recent example is the Bhadla Solar Park where 750 MW of projects were auctioned in December 2017 and the projects are scheduled to be completed by February 2019. However, land is yet to be allocated to project developers. The district collector’s approval has reportedly not been taken and local people are claiming the land earmarked for the park as their own. The issue dates back to the time when the solar park was announced in the early 2010s and the land was allotted accordingly. However, according to media reports, the lack of fencing led to land encroachment over the years. The irony is that the entire plot is government owned, and yet people have been living on it and are now claiming compensation for their relocation.

A common issue being faced, especially in the wind power segment, is that EPC contractors create land banks across different states and regions, which are then offered to project developers for investment purposes. Often, developers are unable to commission the project within the stipulated period. In this regard, the respective state nodal agency (SNA) needs to ensure that the project development takes place within the earmarked time and no new sites are allocated to these companies before the development of all previously allotted sites. This is what has happened in the case of wind projects being set up under SECI’s tenders in Gujarat. Appropriate penalty clauses along with the requirement to submit bank guarantees may, therefore, be incorporated in the solar and wind policies.

A holistic policy on land utilisation should be developed by each state government to balance the land requirements of different sectors in the most prudent and ecologically friendly manner. The land policy can map the existing use versus the intended use based on parameters like employment generation potential, environmental sustainability, population density and change in land use. Each government department can present its land requirements, which need to be assessed based on the overall benefits to the country, the society and the local community. The State Land Board can play an important role in this exercise using information technology tools. Alongside, the SNA can share the wind and solar atlas of the state with the board to identify and earmark areas that can be used to set up these projects. These areas can then be offered under auctions to source green energy at the lowest possible tariff.

However, finding contiguous stretches of land, and that too unaffected by encroachment, is becoming increasingly difficult. In October 2017, the Odisha government, after failing to identify a contiguous tract of 5,000 acres of land for developing a 1,000 MW solar park, decided to adopt a cluster approach and auctioned only 400 MW of capacity.

Another major hurdle that needs to be addressed is the existence of unorganised land records. The maximum time needed during the overall land procurement process is at the level of the patwari, whose job includes examining and reconciling records to ascertain the availability of the land and physically demarcating the land in the presence of the developer and the land owners. It takes several weeks, and sometimes months, to finalise the exact land coordinates and identify the rightful owners to undertake commercial negotiations. In many cases, there are multiple owners of the same parcel of land. There is a lack of digitisation of land records and inconsistency in updating them. Andhra Pradesh is a key example where the state government announced the setting up of three large solar parks – Anatapuram I and II, and Kadapa. It was only after land had been earmarked for the parks that it was realised that part of the land had already been allotted for other purposes but had not been mentioned in the revenue records. This led to delays in solar project development.

All these examples indicate that given that land is a state subject, there should be greater coordination between state and central government agencies before announcing policies, tenders and due dates that match the reality on the ground.

Given that land is an increasingly difficult and expensive resource to acquire, other alternatives need to be explored. In this context, land neutral technologies such as rooftop solar and floatovoltaic projects have started gaining traction. In fact, rooftop solar was the silver lining in 2018, with installations growing at a healthy clip, albeit on a small base. According to estimates, India added 1,588 MW of rooftop solar capacity in 2018, compared to 1,082 MW in 2017 and 556 MW in the preceding year. With no land issues, this segment could provide some tailwinds.

Floatovoltaic projects provide another opportunity to harness solar energy in a land neutral mode. These projects generate more power than land-based ones due to the cooling effect of water on the modules, resulting in lower temperatures. They also help in saving water by reducing the level of evaporation. Even though these projects are associated with higher capital investments, they are commercially viable on a long-term basis. According to the National Register of Large Dams, India has 4,862 large dams (with walls that are at least 15 metres high). Of these, 59 are considered to be of “national importance’’ and collectively have a water surface area of 12,732 sq. km – 22 times the size of Mumbai. Floatovoltaics seem to be finally picking up with several projects already commissioned and a number of tenders having been released. Floating solar has been waiting to happen and auctions for 5 GW of solar-on-water seem indicated for 2019.

Wind-Solar hybrids are another technological solution that can be explored on a large scale. Solar resources are available in abundance across the country. As such, the spare land between wind turbines can be optimally utilised for putting up solar modules. This will help in optimum land utilisation, better use of existing evacuation infrastructure, improvement in the profile of energy generated and efficient utilisation of resources for project maintenance. The first utility-scale commercial wind-solar hybrid was commissioned in the country in 2018, and the Ministry of New and Renewable Energy (MNRE) along with several states has released dedicated policies for such projects. These now need to be effectively rolled out to attract investors to this space.

To conclude, there is plenty of land available in India. However, the issue of land constraints for renewable energy projects is only getting worse. Large chunks of government land are not available in most states. And wherever it is available, the status is not clear. As for private land, there are way too many regulatory constraints pertaining to land use, land conversion and other procedures. And regulations vary across states. For instance, in Uttar Pradesh, the powers for land conversion, procurement and leasing have been delegated to the commissioner, but in Tamil Nadu, Maharashtra and Karnataka, developers have to go right up to the state government for such approvals. It is estimated that it takes over six to nine months to procure land for setting up solar/wind projects, even though many of the SNAs provide deemed non-agricultural status with regard to change in land use. Moreover, there are often allegations of corruption at the local official level.

In order to resolve these issues, there is a need to develop land utilisation policies at the state level, expedite computerisation of land records and prioritise the use of wasteland, among other steps. Land neutral technologies like floatovoltaics and rooftop solar need to be promoted, along with land efficient technologies such as solar-wind hybrids. Finally, conducting social impact assessment exercises for wind farms and solar parks above a certain capacity should be made mandatory. These could include livelihood and skill development planning for the local community. Until serious interventions are made at the policy, technical and socio-economic levels, land issues will continue to constrain renewable energy growth.

By Dolly Khattar

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