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Story of developing public private partnerships in solar energy projects in Gujarat, India

Tuesday, May 18, 2010 Leave a Comment

One of the most critical factors impacting the growth of solar power is availability of land. Land acquisition is one of the major issues for most of the infrastructure projects including energy. The process of acquiring land at time leads to time delays and cost overruns in most of the power projects undertaken. Now what is the solution to fast track this whole process?

1.      Government can come up with a proposal for the independent solar power producers to allocate the land based on their requirement. Obviously this has to go under bidding process along with the stringent deadlines for competition of the project within the stipulated timelines. Non-adherence can lead to penalties and exclusion from bidding in future solar power projects.

2.      Towards this, the government has to acquire the land before the proposal is been sent out. A separate cell can be made which would look into only land acquisition. The land has to be non-arable or semi-arable. The grid-connectivity should be feasible. Also in favor of the owner of the land, the land should be acquired at the current market price and not at the subsidized rate. This would give the motivation to the land owner to sell off his land too.

Now the question arises, what would government get in return?

1.      The process of the solar energy development is fast-tracked. The government owns the land and the private player is provided with a Power Purchase Agreement (PPA) for 25 years (i.e. the expected life of the solar panels). The rate same as in feed-in-tariff can also be provided which would also increase profitability of the solar power producer.  

2.      The private player has to bring in operational efficiencies as it has only 25 years to earn profits. However, the solar producer has to calculate it's return based on the panels and the initial installation costs.

3.      The government also gets hold on the Renewable Energy Certificates (RECs) which can be traded in future.

4.      Already many states such as Gujarat in India have started adopting the PPA model. But the land acquisition still remains a headache for the solar power producers. This model can resolve this issue.

This would help in bringing economic and environmental plans to a reality. Without such arrangements, the solar plan of achieving 20 GW of solar power by 2022 would be in jeopardy.  

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