In India, renewable energy resources are not equally distributed across the country. The country’s wind power potential is confined to only seven states, while solar power, though available throughout the country, has the best potential for development only in a handful of states. Apart from the actual resources, the availability of adequate land, political will and enabling regulations determine the scale of renewable energy development that takes place in a state. This results in a geographically skewed proliferation. Karnataka is the leading state in terms of total installed renewable power capacity, followed by Tamil Nadu, Gujarat, Maharashtra, Rajasthan and Andhra Pradesh. These states are blessed with a high resource potential and have historically been at the forefront of solar and wind power development.
However, according to an analysis by Renewable Watch, three out of these six states are witnessing a slowdown in capacity addition due to inherent regulatory issues and policy paralysis. For instance, Andhra Pradesh has seen a loss in developer confidence due to the recent controversy involving tariff renegotiation by state authorities, which put huge investments at risk and stalled project development and lending activity in not only this state, but also in other parts of the country. Further, Karnataka has achieved its solar target, and is not keen to develop any more large-scale solar projects. Inadequate transmission infrastructure, discontinuation of open access projects since 2019 and the state’s decision to repeal the zero-wheeling charges order are expected to lead to a decline in capacity addition. Tamil Nadu has witnessed a significant slowdown in capacity addition of both solar and wind power as developers have been facing issues regarding power evacuation, grid curtailment and payment delays.
According to Renewable Watch Research, while Gujarat, Maharashtra and Rajasthan will retain their positions as leaders in this space, three other states are likely to emerge as favourable renewable energy destinations as the policy and regulatory environment in the country evolves. These are Haryana, Madhya Pradesh and Uttar Pradesh, which are witnessing a lot of action from both state authorities as well as developers. New tenders are being issued, open access markets have opened up and bureaucratic hurdles being resolved. Renewable Watch highlights the recent developments in these six upcoming centres of growth and activity…
With 10.59 GW of installed renewable energy capacity, and a huge untapped solar and wind potential, Gujarat will continue to be an important centre of renewable energy growth. It aims to achieve an ambitious target of 30 GW by 2022. Three large solar parks have been sanctioned in the state, the 700 MW Radhnesada Solar Park, 500 MW Harsad Solar Park and 5,000 MW Dholera Solar Park. Of the total 1,000 MW capacity of the Dholera Solar Park Phase 1, the auction process for 300 MW has already been completed and the remaining 700 MW capacity was retendered in March 2020. In March 2020, the state also auctioned 500 MW of grid-connected solar projects (Phase VIII). In addition, the state government is planning to install 1,600 MW of rooftop solar power by 2021-22. This is being supported by a Rs 10 million subsidy programme for the development of group captive rooftop projects, as well as a residential rooftop scheme. The state discoms are in good financial health, well positioned for large-scale rooftop solar deployment.
On the wind power development front, the state auctioned 745 MW of wind power in May 2019 as part of a 1,000 MW tender. Besides, the state has been allocated capacity under the Solar Energy Corporation of India’s (SECI) wind power tenders due to its high wind potential, especially in the Kutch region. Gujarat also holds a significant offshore wind potential. Recently, it has been in the limelight for strict land allocation policies, which temporarily stalled capacity additions. Apart from capacity addition, the state is focusing on transmission and land issues and is valued among developers for its hassle-free permits, good payment track records, minimum offtake risks and regulatory clarity.
Haryana is a late mover in the renewable energy space, with just 531 MW of installed capacity. The state authorities are undertaking a slew of regulatory measures to expand capacity. Although the current installed solar power capacity is around 250 MW, Haryana has an extensive solar project pipeline of around 700 MW across all segments. In 2019, it issued tenders for large utility-scale solar projects. In view of the land constraints due to the small size of the state, the authorities are encouraging the active deployment of rooftop solar projects and have issued tenders for canal-top and floating solar projects.
When most states are trying to restrict open access, Haryana is one of the few states that has a large pipeline of open access projects under development including a 120 MW project by AMP Energy, a 150 MW project by Cleanmax Solar and another 150 MW by Amplus Solar. This has been made possible by the reintroduction of waivers on wheeling charges, cross-subsidy charges, transmission and distribution charges, and additional surcharges in March 2019. Thus, the open access charges for solar projects in Haryana are exempted, which makes the landed cost of open access solar power quite low for commercial and industrial (C&I) consumers. Haryana has even allowed discoms to meet their renewable purchase obligations (RPOs) by leveraging corporate power purchase agreements (PPAs). A similar approach can be adopted by other states to attract more renewable energy investments.
In a short time, Madhya Pradesh has emerged as one of the most-sought-after states for solar power development owing to the adoption of innovative models for all consumer categories and significant tendering activity. The state’s first large solar park, the Rewa Ultra Mega Solar Park has a nameplate capacity of 750 MW. Apart from the state discoms, it is supplying 99 MW of power to the Delhi Metro Rail Corporation through the open access route, the first such interstate solar open access transaction of a large magnitude with another state’s commercial consumer. Other solar parks under development include the 550 MW Agar Solar Park, the 500 MW Neemuch Solar Park and the 450 MW Shajapur Solar Park. These solar parks will incorporate several features of the Rewa Solar Park including payment security for developers and will sell power through open access to commercial consumers like Indian Railways.
State authorities’ initiatives are not limited to large solar plants, but also extend to rooftop solar, which has witnessed a significant tendering activity with historic low tariffs owing to concessional loans, payment security, and work such as building identification and preliminary engineering design already done for developers. Moreover, the tenders were not limited to institutional consumers, but also included industrial facilities. Other areas of development include floating solar projects planned on the state’s large reservoirs. Overall, the state is making efforts to make solar power accessible for everyone including farmers, discoms, and public and private consumers, and provides many innovative scalable investment models for other states.
Over the past few years, the Maharashtra government has been taking several initiatives to promote renewable energy development. The state has emerged as the leader in the rooftop solar segment with the highest number of installations. It recently came up with utility-scale tenders for both solar and wind projects and received a huge response from the industry. Maharashtra has a strong pipeline of projects. The state tendered the maximum amount of solar capacity in the country between August 2019 and April 2020. These include two solar tenders of 500 MW each in August and November 2019. However, some of the tenders received a poor response including a 1,350 MW tender for projects to be developed across 30 districts, which received just one bid for 5 MW, and a 750 MW tender for agricultural feeders. Meanwhile, a 1,000 MW solar tender in January 2019 was oversubscribed by around 900 MW.
After continuously lagging behind its non-solar RPO targets, the state decided to procure more wind power and issued two tenders for 500 MW and 200 MW in September 2019 and December 2019. It had also launched a 500 MW tender in June 2019, which received bids for only 7 MW due to low ceiling tariffs. With an unsatisfactory response in its solar and wind tenders, the state is exploring other options for increasing its renewable energy penetration. It is developing a total of 500 MW of floating solar power projects at four of its dams – Wardha, Bebala, Khadakpurna and Pentakli. Moreover, it has issued tenders for solar-wind hybrid and bagasse-based power. Although the state might not be able to achieve its RPO targets in time, it has certainly been proactive in fast-tracking growth in the solar and wind segments.
Rajasthan is one of the early movers in the solar power segment, with solar power capacity growing at about 40 per cent annually between 2014-15 and 2019-20 to reach close to 5 GW by March 2020. The state has set a tall target of 30 GW of solar power capacity by 2024-25. To this end, various solar parks are under development. The largest among these is the 2,255 MW Bhadla Solar Park, which is being developed in four phases and has been commissioned partly. Other solar parks include the 750 MW Pokhran-Phalodi, 1,500 MW Phase 1B of the Fatehgarh and 1,000 MW the Nokh-Jaisalmer parks. The state has about 7.5 GW of solar capacity under development.
Despite a high wind power potential, the state has not conducted any auction till date, and its capacity additions have reduced to nil in recent months. Interestingly, Rajasthan’s upcoming solar power capacity has been won through tenders issued by SECI, while the state agencies have taken a back seat in the bidding activity. Even the state’s new RPO targets are quite low compared to those prescribed by the Ministry of Power.
However, its recent decision to provide land for 19,000 MW of renewable energy parks to address land and transmission issues is expected to make the state an attractive location for developers. The state has also released several enabling regulations to remove uncertainties. Thus, Rajasthan is preparing for greater renewable energy uptake by aligning itself with the right set of policies despite a short-term hit to its capacity pipeline.
Uttar Pradesh’s solar power uptake has been limited with just 1 GW of installed capacity as of March 2020, owing to low utilisable potential, policy irregularities, poor power supply infrastructure and unavailability of adequate land near major load centres. The state authorities have introduced a range of measures to increase solar deployment including revision of existing policies and land allocation laws and strengthening of the transmission infrastructure in the solar-rich Bundelkhand and Purvanchal regions. A 600 MW solar park is also being planned for development in Jalaun, Etah, Mirzapur, Allahabad and Jhansi districts.
Moreover, the state authorities have been issuing solar tenders in quick succession with at least five bids of roughly 500 MW each released since June 2018. The initial tenders received a positive response with many bidders participating in more than one auction, showing developers’ confidence in the state’s tendering process as many cumbersome approval mechanisms were streamlined. However, the recent tenders have been heavily undersubscribed largely due to the non-availability of adequate power evacuation facilities.
The first-ever auction for floating solar was for a 150 MW project at the Rihand Dam in Sonbhadra district. In this tender, ShapoorjiPallonji and ReNew Power emerged as winners at a tariff of Rs 3.29 per kWh. Uttar Pradesh is one of the few states in the country that is attractive to developers of large-scale open access projects despite high charges. The state authorities had sanctioned 485 MW of open access projects as of May 2019, including a 70 MW project being developed by SunSource Energy. In addition, rooftop solar projects are gaining traction with net metering approvals given to capacities higher than 2 MW including 3.34 MW for GautamBudh University and 10 MW for the Noida metro. The state has implemented various regulatory measures to promote the bagasse-based cogeneration and waste-to-energy segments, streamlined the approval process and addressed operational challenges. Thus, the outlook for the renewable energy sector in Uttar Pradesh seems bright.
The renewable energy space, especially wind and solar, is continuously evolving. Supported by technological advancements, they are offering more cost-effective and efficient products. With tariffs dropping to below Rs 3 per unit for both these power sources, developers and consumers are diversifying their business models in order to gain maximum advantage. Thus, apart from large utility-scale projects, rooftop solar, hybrids and floating solar projects are being explored with a variety of power offtake options including discom PPAs, open access, captive and group captive. Hence, while competitive bidding is important to attract developers with assured discom PPAs, enabling regulations are required to provide support for alternative power procurement options especially to the large C&I consumer segment. For this reason, late movers like Haryana and Uttar Pradesh, with their progressive regulations, have quickly emerged as top destinations for developers catering to C&I clients.
Summing up, to stay in the race, the states need to rework their strategies for inclusive growth of all stakeholders and segments in the renewable energy space.