India

India

Gujarat land allocation logjam threatens wind's viability

Nearly 2GW wind capacity from federal auctions is stranded in Gujarat because of land allocation issues.

Inox Wind is one of the developers facing a delay in land allocation in Gujarat
Inox Wind is one of the developers facing a delay in land allocation in Gujarat

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Developers including ReNew Power, Sembcorp Green Infra, Enel (BLP Energy) and Inox Wind are struggling to secure land lease agreements from the state government.

The local authority has not allocated any land to wind projects after a decision in late 2018 to lease areas only to projects supplying power to the state utility, rather than for federal projects, which will export power to other states.  

Although there is no obligation on the state to lease land to private developers, exceptions are generally made for projects supplying power for the federal government, meaning all bidders expected a land lease allocation and had bid accordingly.

The alternative option available to the developers to lease or buy private land would be more costly and could jeopardise the viability of the carefully balanced bids.

Gujarat's decision has been contested by the developers, which fear that the state government's territorial mindset may have long-term ramifications for the sector.

Some developers even claimed that the local government had sought an assured supply to the state utility as a precondition to land allotment.

This would have required the developers to dishonour their supply commitment to the Solar Energy Corporation of India (SECI) – the government body that organises the federal auctions.

Commenting on the impasse, one of the developers, who did not wish to be named said: "This is really unfathomable that the state government is not supporting the central government-endorsed projects." 

On the viability of using private land, the source said, "Private land availability is an issue. Even discounting the availability, the additional costs simply do not work out at this tariff level."

The stranded developers were also under pressure to adhere to the SECI deadline for financial closure for the project. The deadline was extended from 3 January to 24 February because of the impasse.

However, the federal government warned a further delay in the closure would incur a penalty of INR 10,000/MW per day ($142/MW per day).

The developers are hoping the issue will be resolved before the February deadline.

Although past discussions with the federal renewable energy ministry and the wind power developers have not yet helped to change the stance of the state government, there are signs of a deal happening.

Speaking to local media, a senior state government official said. "We are keen to have an amicable solution to the issue, but SECI should have first consulted the state as to whether we can give land or not."

Meanwhile, a senior official in the ministry of new and renewable energy (MNRE), also speaking to local media said, "There is no such impasse. We are in talks with the Gujarat government to ensure a resolution of this issue."

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