Clearing the Way

Gujarat’s new policy aims to ensure land availability, but has strings attached

Land acquisition has always been one of the most critical issues in setting up renewable energy projects, whether solar or wind. Solar and wind power projects are location dependent, and these resources are limited to a few states in the country. This leads to a skewed concentration of renewable power projects, creating problems in acquiring land for upcoming projects. Wind power projects need around 0.75 acres per MW, while solar projects require 4-5 acres per MW. Thus, with the limited availability of resource-rich sites and the increase in land prices, the gravity of the land acquisition issue has deepened, causing delays in project commissioning. Meanwhile, a major criticism against the tendering agencies is that they rush to auction projects without ensuring availability of adequate land, which leads to repeated bid extensions. There have been several instances in the recent past of hundreds of megawatts of renewable power projects getting delayed due to land issues.

A case in point is the Pavagada solar park in Karnataka, which was conceptualised in 2015. The project ran into issues over convincing farmers to give up vast amounts of their land for project development. The entire process of conceptualising the park, acquiring land and developing the required infrastructure took over two years. This also brought to light a more important concern, that of using agricultural land for solar deployment. Thus, the use of wasteland for building solar parks was thought to be an ideal way out, as it would allow for more beneficial utilisation of land. However, issues related to property rights and encroachment have been reported for the Bhadla solar park in Rajasthan as well. Similarly, land allocation issues in Gujarat are a classic example of this problem in the wind power segment, resulting in thousands of megawatts of wind capacity getting stranded.

Gujarat land allocation case

The Solar Energy Corporation of India’s (SECI) Tranche III and Tranche IV wind power auctions were conducted in the first half of 2018, and most wind power developers opted to set up projects at the wind-rich sites in Gujarat. However, the relevant state agencies insisted that the centre should have consulted the state government before holding these auctions, as they had concerns regarding the scattered development of projects and transmission lines. Moreover, they wanted the projects located in Gujarat to supply power to the state alone, and decided to allocate land only for bids conducted by the state itself. Thus, the state authorities delayed the transfer of land for projects allocated in the SECI bids. As a result, many of them were stranded, with equipment orders already placed and construction contracts signed. Some developers even resorted to buying expensive private land and tied up with land aggregators, thus being forced to take a hit in their margins.

The central government had to finally intervene on behalf of the developers. In early 2019, the revenue department of the state released an order stating that the winning bidders of the state and central government auctions, with letters from the Gujarat Energy Development Agency (GEDA), should be allotted land. This intervention from the state came after several months of the project award, and even with this decision, the developers kept facing uncertainty over getting lease approvals for their projects.

Policy interventions in Gujarat

To resolve land-related issues and expedite renewable energy project development in the state, in January 2019, the Gujarat government modified its land policy for the development of wind and solar-wind hybrid power projects in the state. This land policy mandates that all future wind and solar-wind hybrid projects will have to be developed in especially earmarked parks on the same lines as solar parks. A total area, capable of accommodating 30 GW of renewable energy, will be sanctioned for the parks, with each park having a minimum 1 GW of capacity. Of the total capacity, 10 GW will be kept aside for PSUs. Moreover, the state made it mandatory for central government entities such as SECI and NTPC to consult Gujarat state departments before issuing tenders for wind or hybrid project capacities, so as to keep a check on the preparedness of the parks and land availability.

The state government has earmarked land in the renewable-rich wasteland of Kutch for the development of such wind and hybrid parks. This is the first significant move by any state to address the land- and transmission-related constraints impeding the development of large renewable power projects and ensure planned development. Through dedicated parks, power evacuation will be more streamlined and convenient, without any criss-crossing of transmission lines across the state due to scattered project development. Moreover, central government agencies tender projects that can be set up anywhere in India, and these dedicated renewable energy parks will prevent issues of land availability for developers.

More recently, in September 2020, the Gujarat government modified its policy for allocating wasteland for wind, solar and wind-solar hybrid energy parks. The new provisions set clear timelines for project implementation, to make renewable power development more planned and streamlined. As per the new provisions, renewable energy developers will have three years to build at least 50 per cent of the allotted project capacity from the date of the sites being handed over. They will get two years post that to complete the entire work, after which a project review will be done. If 100 per cent of the capacity is not installed by then, the land may revert to the relevant state authorities. Further, in case 50 per cent project capacity is not completed even after the initial three years, the total capacity may be reduced, with the required land for the project being given to the developer and the remaining land being taken back by the government.

The state government will provide the wasteland on lease to park developers for 40 years – five years for development and 35 years for power generation. Further, the park developers will be allowed to sublease the land to project developers or develop the project  themselves.

The latest policy intervention makes developers more accountable, with strict timelines and the risk of the land being taken back by the state in case of work not being completed within the deadline. However, with the challenges being faced in getting timely approvals and the delay in the construction of power evacuation infrastructure, it may be difficult, in many cases, to complete even 50 per cent of the project capacity in three years. A recent report by the Central Electricity Authority shows that the signing of power offtake arrangements is yet to be done for about 39 per cent of the solar project capacity awarded over the past two years by SECI. The same report notes that 2 GW of solar projects awarded under SECI’s Tranche 1 solar auction in July 2018 are stuck due to the unavailability of power evacuation infrastructure in Rajasthan. In Gujarat, since the bulk of the capacity is coming up in the Kutch region, transmission lines to cater to these projects should have been constructed at a faster pace. As this was not done, many wind power projects are getting delayed. Thus, the upcoming policies should take into account all these factors and place responsibility for the timely completion of renewable facilities on all stakeholders – developers, transmission agencies, regulators and other approval authorities.

The way forward

The state authorities have put their plan of setting up mega renewable energy parks into motion. In September 2020, the Gujarat state cabinet approved the long-pending proposal of setting up a 41.5 GW renewable energy park in the Kutch region, and cleared the revenue department’s proposal to allot 60,000 hectares of land for the project. Land allocation plans had been earlier drafted for five major companies and forwarded to the state cabinet for approval. According to the plan, land was allocated to SECI, NTPC, Gujarat Industries Power Company Limited, GSECL, Adani Power, and Suzlon for setting up 23,000 MW, 5,000 MW, 2,500 MW, 3,500 MW, 3,500 MW and 4,000 MW of renewable capacity respectively. The hybrid renewable energy park is projected to attract an investment of around Rs 1,350 billion.

With such a huge capacity renewable energy park being planned in Gujarat, it is important for the state agencies to streamline development timelines and have strict implementation schedules. Thus, the policy interventions of January 2019 and September 2020 are refreshing initiatives by the state government to ensure land availability for developers, especially since the state has received criticism in the past for its land allocation rules. The timely completion of the required transmission infrastructure is equally important. Moreover, there needs to be coordination amongst all the participants, starting from the regulatory bodies, transmission agencies, and project developers to the local government at the district and village level, so that no time is wasted in obtaining approvals and project commissioning can be achieved without developers paying the price for unnecessary delays.


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