Solar Parks in India

The Concept

The Union Ministry of New and Renewable Energy (MNRE) has announced a scheme to develop at least 25 solar parks, each with a capacity of 500 MW and above targeting over 20 GW solar power, across the country in next five years at an outlay of Rs 4050 crore. The final scheme from the MNRE can be accessed here. It was approved by the union cabinet in Dec 2014.

These solar parks are common development zones for solar power projects and offer developers location that is well characterized, with proper infrastructure and access to amenities and where the risk of the projects can be minimized. Solar Park also facilitates developers by reducing the number of required approvals.

The idea of solar parks emerged from the success of the ‘Charanka Solar Park’ in Patan, Gujarat which was closely followed by the ‘Bhadla Solar Park’ in Rajasthan. They have quickly emerged as a powerful mechanism for the rapid development of solar power projects in the country.

Charanka Solar Park in Gujarat is the first-of-its-kind large scale solar park in India with contiguous developed land, transmission connectivity and provision of other amenities and infrastructure. A solar power developer can get fully developed land along with transmission and other facilities and can, therefore, set up a power project immediately. The Charanka Solar Park has a capacity of 590 MW, out of which 224 MW has already been commissioned by 20 developers.

Utilizing economies of scale, the Ultra Mega Solar Power Projects (UMSPP) with capacity of 500 MW or above have also been planned. Large chunks of land are available in some States for solar park development. There are some developers who are keen to individually take up such huge solar power projects. Some UMSPP may be set up in the proposed Solar Parks or the entire park may individually be an UMSPP.

Smaller parks could also be considered under the scheme in Himalayan states where large tracts of contiguous land may be difficult to acquire and in States where there is acute shortage of non-agricultural lands.

The solar parks would be developed in collaboration with state governments and so far 12 states have shown interest. Lands have been identified in Gujarat, Madhya Pradesh, Telangana, Andhra Pradesh, Karnataka, Uttar Pradesh, Meghalaya, J&K (Leh and Kargil), Punjab and Rajasthan.

Implementing Agencies

Solar Energy Corporation of India (SECI) under the ministry would be the nodal agency and manage the funding for a fee, equivalent to 1% of the grant disbursed. The State Governments will play an additional role in the development and operation of the solar parks. They would be free to choose their agency for implementing, developing and maintaining the solar parks. Special purpose vehicles (SPV) of state governments too would be eligible to develop and manage the parks, as would be 50:50 joint ventures between SECI and state government entities. The money is expected to be spent in phases, starting with Rs 500 crore in 2014-15 and going up to Rs 1,400 crore in 2018-19.

In Madhya Pradesh, a special purpose vehicle (SPV) has been formed between the Center and the State. The power evacuated would be sold to the SECI which would then sell it to the utilities. Telangana is also likely to sell solar power to the SECI.

The project developers would bid for viability gap funding support from the Centre. They would be selected through bidding as per norms set by the central tariff regulator.

Advantages of Solar Parks

The solar parks offer facilities to make them attractive for investors/developers. Individual promoters usually have to spend a lot of time to acquire land, get change of land use and other clearances from various state government bodies, including consent from state transmission utilities which cause delays. They also have to incur significant expenses in site development, drawing separate transmission lines to nearest substation, procuring water and in creation of other necessary infrastructure like fencing, waste treatment and so on. A solar park removes most of the hurdles faced by individual small project developers.

Under the scheme, developers would be invited only after all statutory approvals are in place. A solar park offers specialized services to attract investment from private developers.

This would include levelled land, roads, water, security, and communication facilities required for commissioning and operating the plants. Centralized Weather Monitoring Stations would be set-up by the implementing agency so as to provide weather data to the projects in the solar parks.

Providing these services in a central “one-stop-shop” format will make it easier to implement projects in a significantly shorter period of time, as compared to obtaining these services individually. It should also make it easier to secure financing. Holistic planning of the common infrastructure will also reduce damages to the landscape of the area.

These benefits of course come at a price. The estimated cost for development of a solar park would be around Rs 0.95 crore per MW. But they will greatly help in reducing the risk and gestation period of the projects, as developers will not have to waste resources and time for getting statutory and other clearances. At least 20% power will be bought by the state utilities and for the rest project developers will have to sign PPA with other consumers.

Therefore, solar park can be thought of as a shopping mall where the mall owners provide the entire necessary infrastructure (at an additional cost) and the shops only need to sell without worrying about parking, security, housekeeping etc.

Critique of the Solar Park Scheme:  Centralized vs Distributed PV

There are people who are not in favour of the concept of centralized solar power generation. Since distributed generation is a key attribute of solar energy they advocate in-situ power generation and consumption in the form of distributed generation such as rooftop solar PV, off-grid PV or solar micro grids. In fact, this is how rest of the world sees solar energy and focus on distributed solar power generation.

So they wonder, why is India going in the opposite direction? India has 25 – 30% transmission losses, among the highest in the world, so how does it make sense to have these sorts of centralized huge projects?

There are practical reasons that make distributed generation currently unpopular. In fact, the challenges are related to net metering and low residential tariffs. In a country like India where power deficit is so high, both massive solar parks, and smaller stand alone PV systems can easily co-exist if the right incentives are provided.