According to reports, Gujarat may be the pioneer Indian state to harvest solar energy, but it is losing its pre-eminence due to a mix of policy indifference, rising land costs and the state driving a hard bargain on the price it pays for power.
Even before the Jawaharlal Nehru National Solar Mission was announced, the Narendra Modi government had a solar energy policy in place in 2009 to attract solar power project developers to Gujarat. The initiative catapulted the state to the top slot in solar power generation in India: A couple of years ago, it had 70 per cent of the country’s 1,000 Mw solar generation capacity.
The Gujarat Urja Vikas Nigam Ltd has signed 88 agreements to buy 971.5 Mw of solar power for 25 years at a blended price of Rs 12.54 a unit. The state also has a 590 Mw solar park over 5,384 acres in Patan district. It was launched on December 30, 2010, commissioned on December 31, 2011, and was formally dedicated to the nation by Modi on April 19, 2012.
Gujarat is still ahead with a solar power commissioned capacity of 860.4 Mw, but the rest of the pack is catching up. Rajasthan has 666.75 Mw installed and Madhya Pradesh is gaining ground at 195.315 Mw.
Of the 2,208.36 Mw capacity across the nation, Gujarat now has 39 per cent.
“Gujarat’s share in the country’s solar power production has reduced from 70 per cent a couple of years ago to 39 per cent now,” says Pranav Mehta, Chairman, National Solar Energy Federation of India. The slide is mainly due to policy inaction. No new scheme has been announced since 2009. “The climatic conditions in Gujarat are wonderful, but the government is not coming up with new schemes to attract more investors,” said H S Wadhawa, chairman, Azure Power.
Land prices have also shot up substantially in the state and solar power developers, whose land requirements are substantial, must invest more per megawatt in Gujarat. “The land cost is very high compared to Rajashthan and Madhya Pradesh,” Wadhawa added.
Also, as production costs of solar energy decline, Gujarat Urja Vikas Nigam is pushing for a 25 per cent rate cut from what was agreed in the original power purchase agreements. The state electricity regulator has ruled against the power utility, and its verdict is in appeal with a tribunal.
“Gujarat Urja Vikas Nigam has sought rate reduction for the solar power it purchases. Despite the judgment of the Gujarat Electricity Regulation Commission, Gujarat Urja Vikas Nigam has approached the Appellate Tribunal for Electricity for tariff cuts. This has added to the woes of investors,” Mehta said.
“On the other hand, Rajasthan and Madhya Pradesh are getting good response from investors, where they get land at lower prices,” he explained.
State government officials maintained land may be cheaper in Rajasthan but Gujarat’s infrastructure – transmission stations and lines set up in proximity to solar power stations – was superior.
Agrees Vineet Mittal, managing director, Welspun Energy Limited, “We have 50 Mw of solar projects in Gujarat and plan to set up more.”
According to Mittal, like Gujarat, there is a tremendous potential for solar power in Rajasthan. Also, favourable state policies propel investments in this sector. It is expected that Rajasthan will produce more than 20 Gw of solar power by 2022. Madhya Pradesh, too, has great potential. It invites bids larger projects and provides the longest commissioning time.
“Gujarat has all the infrastructure in terms of connectivity and power evacuation for solar power development. But now Gujarat will have to become more competitive. The state government needs to review its policies in order to attract commercial ventures,” said Rajendra Nimje, managing director, Solar Energy Corporation of India.
Solar Energy Corporation is setting up a 4,000 Mw solar power park in Rajasthan in which six central public sector undertakings are partners. It is also developing a 1,000 Mw solar park in Andhra Pradesh.
“Tamil Nadu and Andhra Pradesh are emerging as new destinations,” he added. Nimje further said a 5,000 Mw solar park was being planned in the Kharaghoda region of Gujarat, details of which are likely to be finalised after the general elections.