The Solar Way

Madhya Pradesh exploits its sunny climate and large tracts of land

Located in the heart of the country, Madhya Pradesh is the second largest Indian state by area and the fifth largest by population. Endowed with a huge potential and adequate land area for renewable power development, Madhya Pradesh is well positioned to meet its citizens’ energy needs through more clean energy.

As of June 2021, the state’s total installed power generation capacity stood at 25,197 MW. Renewable energy makes up about 21 per cent of this power mix, and there are plans to rapidly increase this share in the coming years. The renewable capacity in Madhya Pradesh has grown nearly tenfold over the past decade. The total installed renewable energy capacity in the state was less than 500 MW in 2012, and it now stands at 5,244 MW.

Solar and wind energy each have a balanced share of about 48 per cent in the total renewable energy capacity of Madhya Pradesh. In July 2021, the provisional renewable energy generation through wind and solar power for Madhya Pradesh stood at 997 MUs, of which 695 MUs was based on wind and 302 MUs on solar power. That said, the growth in the renewable space has largely been driven by solar power installations in the past few years, with a continuing trend.

Solar success

Solar projects have taken centre stage in the sunny state of Madhya Pradesh. A large portion of solar power development in the state is taking place through large-scale solar parks. Of the solar parks approved for 2021 in India, the maximum have been approved for Madhya Pradesh. In fact, of the 18,000 MW of capacity approved for solar parks, about 5,000 MW is to be developed in Madhya Pradesh alone. The solar parks approved include the 1,500 MW Agar-Shajapur-Neemuch Solar Park, the 600 MW Omkareshwar Floating Solar Park, the 950 MW Chhatarpur Solar Park and the 1,400 MW Morena Solar Park. These parks are expected to be operational by 2022-23. Solar parks are also being developed in Damoh, Ratlam and Sagar districts. The projects are at various stages of implementation with land identified for the Rewa-2, Chhatarpur, Morena, Sagar and Ratlam solar parks.

The scale of solar power development has attracted significant private and international investment in addition to public sector funding. Multilateral organisation International Finance Corporation (IFC) has acted as the transaction adviser and the World Bank as loan provider for the development of the transmission infrastructure for solar parks in Madhya Pradesh. Rewa Ultra Mega Solar Limited (RUMSL), a joint venture of the Solar Energy Corporation of India and Madhya Pradesh Urja Vikas

Nigam Limited, collaborated with IFC on various aspects of project development and funding. The funding provided by the World Bank for the solar park infrastructure through a loan to IREDA has further helped in keeping solar park charges low and has enhanced the credibility of the project among developers.

The legacy of Rewa

Under RUMSL, the landmark Rewa ultra mega solar power project with a 750 MW capacity was commissioned in 2019. It was the first project in India to reach grid parity, with record low tariffs at the time. The Rewa auction conducted in February 2017 witnessed the lowest solar power tariffs, with winning bids of Rs 2.97 per unit. Madhya Pradesh signed a deal with the Delhi Metro Rail Corporation for power supply from the project, becoming the first state to have successfully undertaken an interstate solar open access transaction on a large scale with another state’s commercial consumer.

The positive response to the Rewa Solar Park has helped RUMSL to take up 1,500 MW of grid-connected solar projects at three solar parks in the state. RUMSL initially issued tenders for the three solar parks in 2018. However, due to central and state elections, the tenders were delayed. Later, in 2020, RUMSL reissued the tenders. The first tender was for developing 450 MW of grid-connected solar projects at the Shajapur Solar Park. The second was for 550 MW of solar projects at the Agar Solar Park, and the third was for 500 MW of solar projects at the Neemuch Solar Park.

The third tender for the Neemuch Solar Park was oversubscribed by 7 GW. The recently concluded auction for 500 MW of capacity at the solar park saw TP Saurya, a Tata Power subsidiary, and Aljomaih Energy and Water Company emerge as winners. TP Saurya was awarded 170 MW at Rs 2.14 per kWh and 160 MW at Rs 2.149 per kWh. Aljomaih Energy and Water Company won 170 MW at Rs 2.15 per kWh.

In July 2021, NTPC Renewables and Talettutayi Solar Projects Nine (SolarArise) were announced as winners in the auction for 450 MW of solar projects conducted by RUMSL. The capacity will be set up at the Shajapur Solar Park in Madhya Pradesh. The total capacity of 450 MW comprises solar projects of 220 MW, 125 MW and 105 MW. For this tender, 15 bidders (13 domestic and two foreign) were shortlisted. The lowest tariff of Rs 2.33 per kWh was quoted by NTPC Limited, which won a capacity of 220 MW at this tariff. In addition, it won 105 MW at a quoted bid of Rs 2.34 per kWh. Talettutayi Solar Projects Nine (SolarArise) won a capacity of 125 MW at Rs 2.339 per kWh. The RUMSL tender for 450 MW of solar projects at the Shajapur Solar Park in Madhya Pradesh was oversubscribed by 5.8 GW.

Not long before, the auction for the Agar Solar Park resulted in a similar remarkable success with Avaada Energy Private Limited quoting the lowest tariff of Rs 2.459 for Unit 1 of 200 MW and Beempow Energy Private Limited, a wholly owned subsidiary of O2 Power Private Limited, offering the lowest tariff of Rs 2.444 for Unit 2 of 350 MW.

The recent tenders have subsequently received aggressive bids and have been oversubscribed. Further, the projects are to be developed with locally manufactured panels without any viability gap subsidy, under the new Approved List of Model Manufacturers. This is in line with the Government of India’s vision of Atmanirbhar Bharat. It aims to reduce its dependency on Chinese imports in the solar segment.

Madhya Pradesh has also expressed interest in setting up renewable energy manufacturing parks in response to the recent notice issued by the Ministry of New and Renewable Energy (MNRE) to states and ports asking them to earmark land with potential for setting up renewable manufacturing hubs.

Agricultural applications

Madhya Pradesh has a large agricultural sector, where solar applications can prove to be very useful. To this end, the state has been setting up solar-based projects such as solar pumps and agricultural solar projects under various schemes. Under the Atmanirbhar Madhya Pradesh road map 2023, the state government aims to install 45,000 solar pumps for farmers at subsidised rates. So far, 22,673 solar pumps have been installed.

The state is also setting up projects under the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM-KUSUM). Recently, Madhya Pradesh Urja Vikas Nigam Limited (MPUVNL) invited bids to select developers to set up 225 MW of grid-connected solar projects ranging from 500 kW to 2 MW, with a ceiling tariff of Rs 3.07 per kWh. Earlier, in May 2021, MPUVNL floated a tender to develop 270 MW of grid-connected solar power projects in the state under Component A of the scheme. Under Component A, the government aims to install 10 GW of decentralised ground-mounted grid-connected solar projects with individual project sizes of up to 2 MW. In December 2020, MPUVNL floated a tender to set up 100 MW of grid-connected solar power projects under Component A of PM-KUSUM. Later in February 2021, it increased the capacity of bids from 100 MW to 300 MW. Overall, these tenders have a total capacity of nearly 600 MW, to be set up under PM-KUSUM scheme.

Emerging avenues

Among the solar parks in the pipeline, a large-scale floating solar park is also planned. In January 2021, RUMSL floated a tender for the preparation of a detailed project report for the development of solar parks in the state. The solar parks under consideration were the 950 MW Chhatarpur Solar Park and a 600 MW floating solar park at Omkareshwar. The floating solar project is being planned for the reservoir formed by the Omkareshwar dam across the Narmada river. This is expected to be among the largest floating solar projects in the world. The installation will require about 2,000 hectares of land and an estimated investment of about Rs 30 billion.

Since the state has a high potential for solar as well as wind energy, the state government has proposed retrofitting of solar panels at the existing wind power plant sites. This can help by utilising the synergies of the two resources through hybridisation. The MNRE issued a detailed proposal for developing wind parks and wind-solar hybrid parks in November 2020. The proposal listed probable sites for such projects, which were identified with the help of the National Institute for Wind Energy. Among these sites was Madhya Pradesh’s West Nirmar district, where around 11 square km of land was identified with a potential for setting up 1,100 MW of capacity.

Hydropower has not received much attention in Madhya Pradesh and currently makes up less than 13 per cent of the total power capacity. Of late, projects in this space are being explored to augment the renewable power generation capacity in the state. In May 2020, the Power Finance Corporation signed an MoU with Narmada Basin Projects Company Limited to fund 225 MW of hydroelectric projects and 12 multipurpose projects, which integrate a variety of purposes such as power generation, irrigation, and soil conservation. As per the Ministry of Power, the projects are valued at about Rs 220 billion. The state government has conducted a pre-feasibility study of these projects and has given approval for their execution. Some projects covered under the MoU are the Basaniya Project Dindori, Chinki Boras Project, Narsinghpur Raisen Hoshangabad, Sakkar Pench Link Narsinghpur Chhindwara, and Dudhi Project Chhindwara Hoshangabad.

The way forward

The health of the state discoms has not improved much over the past few years, and they continue to suffer from high revenue losses. As per the Ninth Annual Integrated Rating of State Power Distribution Utilities released in July 2021, Madhya Pradesh Pashchim Kshetra Vidyut Vitaran received a grade of B+ for financial year 2020, while Madhya Pradesh Poorv Kshetra Vidyut Vitaran and Madhya Pradesh Madhya Kshetra Vidyut Vitran received C+. Further, the aggregate technical and commercial losses stood at 27.85 per cent. However, RUMSL is optimistic about the recovery of the state discoms in light of the upcoming solar parks being developed. According to a press release, the recently discovered tariffs are about 40 per cent lower than the weighted average solar power purchase cost of the state. With the kind of tariffs achieved for the Agar Shajapur solar parks, the state discoms will save about Rs 46.85 billion over 25 years, which is about Rs 20.18 billion in the present value discounted terms.

The development of solar parks will also lead to the development of remote districts, as with the addition of more renewable capacity, there will be a growing need for quality infrastructure. For these large-scale projects, a 2,900 km line and 11 substations are being developed under the green energy corridors project. There is a need to ensure that the transmission infrastructure is adequate in order to minimise transmission and distribution losses.

Another way to minimise losses is to integrate more distributed renewable energy and rooftop solar power. Madhya Pradesh has a rating of A+ and the sixth rank among states under the SARAL index for rooftop solar. However, rooftop solar only accounts for about 76 MW of capacity, as per MNRE figures for May 2021. This segment could benefit from favourable incentives and streamlined net metering regulations.

Overall, Madhya Pradesh is poised to become a solar hotspot given the pace of renewable energy development in the state and the large solar park pipeline.


By Meghaa Gangahar


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