India solar parks plan hit by infrastructural delays, says Mercom Capital


The 34 planned solar parks in India earmarked for 20 GW of solar PV capacity under the country’s National Solar Mission (NSM) care running into a multitude of problems born not of solar-specific issues, but rather infrastructural problems and land acquisition delays, says Mercom Capital Group.

According to the analysts, an inability among implementing agencies to complete normal land registration procedures in time has led to developers winning bids but being unable to begin solar park construction due to the red tape and, in places, inadequate infrastructure.

Solar parks are planned for 21 Indian states, with the Ministry of New and Renewable Energy (MNRE) mulling increasing their total capacity to 40 GW.

The scheme is part of a program whereby developers can freely build a series of large-scale solar PV plants on land pre-identified by the government. It is intended to boost both domestic manufacturing – with locally produced components given access to the projects – and India’s grander goal of reaching that 100 GW of solar PV by 2022 figure.

However, according to Mercom Capital Group CEO Raj Prabhu, this well-intentioned, top-down initiative is essentially being rushed through. "The problem usually is on the execution side," Prabhu said. "Developers are paying for park infrastructure that is non-existent. Much of the infrastructure is being built parallel to project construction and will be complete when projects are close to completion, which doesn’t help developers."

Those solar companies that have signed up to develop on these ringfenced solar parks have already paid steep park fees, but many are now also having to build parts of the infrastructure themselves, Prabhu added.

Recent auctions for solar park projects have been held in somewhat of a hurry as the government ushers through approvals for solar development before they have even completed land acquisition, Mercom Capital says. This is storing up delays of up to four and five months.

"Project developers are citing issues including lack of road access, clean green lands, and clear demarcation of land areas in these solar parks," added Mercom Capital MD Priayadarshini Sanjay.

There has been praise for the solar park program among developers, chiefly in backing the transparent bidding process that is attracting international investors – a stated aim of government. However, concern is mounting that these 4-5 month delays will prove off-putting for certain firms as they wait for simple issues to be completed, such as trees to be felled, ground levelled and existing transmission lines removed.

Issues differ from state to state, Mercom Capital confirmed. In Uttar Pradesh and Karnataka, simply identifying suitable land remains a problem. In Andhra Pradesh there are complaints of evacuation delays at the Kadapa Solar Park, while Rajasthan officials at the Rajasthan Renewable Energy Corporation told Mercom Capital that the only delays were on the developers’ side. "On our part there have been no delays," they said.

The MNRE has urged the heads of state governments to take all necessary action to expedite this process to ensure the country’s bold solar target is not missed. "The MNRE is having regular review meetings with state governments and solar power park developers to ensure the timely completion of solar parks," energy minister Piyush Goyal said in a Lok Sabha session.

An MNRE official stressed that there is a "lot of planning required" in developing solar parks, and moved to reassure developers that the government is "here to handle" such concerns.

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