According to reports, Gujarat aims to become the solar power capital of India by the end of the year, going by the power purchase agreements signed between developers and state-run power utility Gujarat Urja Vikas Nigam Ltd (GUVNL). These pacts guarantee a fixed 958MW of solar power to be supplied to GUVNL that will be made available to the state power grid by 31 December.
Under the state policy, at least 84 solar projects are to be built in various parts of Gujarat.
According to a recent assessment by the state government, 32 projects, including 22 in the solar park at Charanaka village in Patan district, with a combined 400MW capacity were on track and are likely to be commissioned by December, said a senior government official who did not wish to be identified. Other projects may miss the year-end deadline because of financial tie-ups, land clearances, and carbon credit and grid evacuation issues.
Many of the developers who signed power purchase agreements (PPAs) are setting up their projects in the solar park at Charanaka in north Gujarat that the state government decided to set up last year.
The park is being developed by Gujarat Power Corp. Ltd (GCPL), a state nodal agency, on around 2,400 hectares of wasteland with an aim to provide 800 million units of power on completion.
“The financial tie-up for over 20 projects has been done, EPC (engineering, procurement and construction) contract has been signed and work has been awarded. By the end of December, we expect the park to produce at least 300MW of solar power. Currently, Gujarat generates 16MW of solar power (all outside the park) and this is the highest among all Indian states,” said D.J. Pandian, principal secretary, energy and petrochemicals department.
Developers have been lining up in Gujarat as barren land for solar projects is available. The state will also develop common infrastructure for solar projects. “We are ready to bear the burden for subsidizing this clean energy,” said Saurabh Patel, minister of state for industries, power and energy. “A solar park can decrease the cost of solar power generation significantly, due to economies of scale and use of less expensive, domestically-manufactured components. It can also serve as a solar manufacturing and technology hub.”
The Planning Commission has approved Rs.210 crore central assistance for the Charanaka park. The Asian Development Bank (ADB) has approved a soft loan of $100 million, which includes the development of a smart grid for the evacuation of power.
Some of the developers at the park include SunEdison India (25MW), Alex Astral Power (25 MW), Kiran Energy (20MW), GMR Gujarat Solar Power Pvt. Ltd (25MW), Emami Cement Ltd (10MW) and Azure Power India Pvt. Ltd (5MW) among others.
Naoki Sakai, climate change specialist at ADB’s South Asia department, said the Patan project has inspired the Central and Rajasthan governments to work on similar lines.
Most of the projects are solar photovoltaic plants that use silicon wafers to generate electricity. The total investment in the park is estimated to be in excess of Rs.10,000 crore.
Developers setting up their units in other areas of the state include Adani Power Ltd (40MW), Tata Power Co. Ltd (25MW), Lanco Infratech Ltd (3 units with combined capacity of 35MW), Cargo Motors Pvt. Ltd (25MW) and Moser Baer Energy and Development Ltd (15MW).
Developers are required to provide a bank guarantee amounting to Rs.50 lakh per MW at the time of the signing of the PPA with GUVNL. That’s forefeited if a developer fails to start commercial operations within the agreed time frame.
Financial closure isn’t easy as banks have become strict in lending to solar projects, according to a utility developer. “A developer who cannot complete his project on time may get a lower tariff,” he said on condition of anonymity.
Break even will take at least five years given the high project cost of Rs.15-17 crore per MW, he added.
Work on the evacuation centres to be set up by the state for projects outside the park has not started as the department concerned is facing manpower problems, he said
The PPA stipulates a penalty of Rs.10,000 per day per MW that should be paid to GUVNL for missing the deadline, said another developer, also on condition of anonymity. The penalty amount goes up every month, he said.
Panchabuta finds the numbers to be rather optimistic and our research indicates that one could expect close to about 275-320MW of total commissioned solar power in Gujarat by December 2011. This has been confirmed by industry sources working on the ground in Gujarat. We expect about 120-140MW to come up in the solar park by December 2011 and about 150-180MW outside the park in other locations in the state.