Solar Gold Rush
The Indian state of Tamil Nadu, which is set to announce a solar subsidy policy soon, is seeing a massive gold rush. Note in India, the information about Government policy is generally leaked to big industrialists and insiders much before the actual government regulations are released. This gives a huge advantage to the big industrial houses who can prepare themselves accordingly. Huge chunks of land in the dust bowls of Tamil Nadu districts are being bought for less than $6000/acre. The reason is that developers and opportunists are building up land banks to set up huge solar farms.
The cost of a solar panel has reduced drastically in the last year and the costs of solar energy are below Rs 8/kwh for large ground mounted plants. Note for state solar policies, there is no restriction on imports of super cheap Chinese solar panels which makes the returns all the more lucrative. Unlike the federal subsidy scheme, JNNSM which has proved to be ultra competitive and even loss making for most developers, state subsidies in places like Gujarat have proven to be a gold mine for solar project and solar EPC companies. The current price of solar power at around 15c/Kwh, is already competitive with the rates of electricity being supplied in many parts of India. Couple this with generous state subsidies, allowing solar energy developers to make big returns on their projects. Sales of more than 1000 acres of land in the barren districts are taking place.
Solar in Gujarat
Gujarat has been the biggest promoter of Solar Energy in India amongst all the other states. The State has already implemented a clear and forward looking Renewable Energy Policy with emphasis on Solar Energy. It has signed PPAs with a number of solar project developers under its State Solar Subsidy Scheme. While other states are looking mainly towards the federal subsidy scheme JNNSM to push Solar Energy Generation, Gujarat is looking to push Solar Energy on its own.
Gujarat has leapfrogged far ahead of other Indian states in solar energy installations. This is despite the fact that Rajasthan had won the lion’s share of solar power plant under the federal program JNNSM. While Rajasthan has around 200 MW of solar power plants installed it is still far behind Gujarat in terms of installations at ~650 MW. Note these two states account for almost 85% of the solar power capacity in the country till date. This is inline with my earlier projection that Rajasthan and Gujarat would be the leader in solar power development in India. What is amazing about Gujarat’s achievement is that, it has installed the capacity through state initiative and funds without taking help from the Centre. While a number of other states in India too have started their own solar subsidy programs, they have been nowhere near as good, as transparent or successful as Gujarat.
Gujarat is one of the most industrially advanced states in the country and has been pushing renewable energy strongly. The state is promoting solar power through both RPS and Feed in Tariffs beside promoting Solar Equipment Manufacturing as well. The Gujarat Government is far ahead of other states in rolling out incentives and subsidies for Green Energy. Some of the incentives include RPS, Solar PV & Solar Thermal incentives. The State has already received proposals for setting up around 365 MW of Solar Power. The Gujarat Electricity Regulatory Commission is the agency responsible for the implementation of the RE policy in the state. The state has seen giants like Siemens setting up manufacturing plants to leverage the future growth of Clean Energy in the state. Gujarat has been a trailblazer in Solar Energy in India. Gujarat through its own RPS and Feed in Tariff incentives is targeting 1000 MW by 2013.
Gujarat has managed to jumpstart the largest solar park in the country and managed to get investments in billions of dollars. Solar Panels are being promoted in off grid applications like solar lights as well in numerous parts of the state. The 1 MW solar power plant on the Narmada canal has been one of the most innovative uses of solar power in the country till now.
With the government set to roll out an exclusive solar power policy in a month, there is a mad scramble for land. Buyers are ready to purchase more than 1,000 acres in a single deal to set up solar farms in Cuddalore, Tirunelveli and other barren areas, say industry sources. Tamil Nadu has a high average solar energy incidence and number of sunshine hours per year. The new policy is likely to incentivize investments in solar power generation, as in Gujarat.
The scramble for land has resulted in a huge rise in revenue from property registration in the first quarter of this fiscal. Officials say there has been increase of more than 50% in registration revenue in Cuddalore and Tirunelveli over the corresponding period last year. Chennai, by comparison, registered an increase of barely 4% this quarter.