Change of Land Use: The Pros and Cons of Allowing Agriculture Land for Solar Projects

Ideally, solar installations should be on land that is waste and barren. Such land is unequally available across States. Many Indian states have large tracts of fertile agricultural land which is now being converted to industrial land for setting up solar power plants. Such change of land use, if effected at a much larger scale and without implementing appropriate agricultural productivity improvement measures, can lower the area under cultivation and affect overall national food production outputs. A debate may crop up at a later date as to whether land should be used for food or energy

Land Aggregator Issues

In many states, the IPPs find it difficult to negotiate with multiple landowners. As a result, they engage land aggregators, a euphemism for “middlemen”. While many are willing to provide this service at a modest fee, there have been instances of such aggregators being unscrupulous in their financial dealings. More often than not, landowners in rural areas prefer to do the transactions in cash than by through banking channels. This also creates its share of issues around unaccounted money and ‘benami’ transactions. The IPPs which have a corporate structure also find it difficult to generate and account for such cash requirements.

Land Acquisition Risks and Delays: Are they Likely to Go Up?

1. Land being a state subject, approvals are required from the concerned departments of the state government to procure or lease the land, making it a time-consuming process. It is estimated that six to nine months delays are there for getting clearances. Many developers believe that the single biggest factor for delay in project acquisition is the time-consuming process of land identification and acquisition.
2. Also selecting the right land parcel is based on multiple parameters such as matching topography, soil geology, land-shape and soil characteristics. For instance, loose soil can make solar power project operations and maintenance more expensive.
3. Moreover, issues like encroachment, resettlement and high demand for compensation act as major hurdles in creating delays in land acquisition. In Madhya Pradesh Rewa Ultra Mega Power Project, 63% of the total land earmarked for the project belonged to the Government. There were few scattered built-up structures within the proposed site. The private land parcels were interlocked between the government land parcels and in certain cases due to limited availability of cultivable land, encroachment on the government land at the ground level was present. This led to the payment of higher compensation and administrative issues.
4. Similarly, Andhra Pradesh State Government recently announced its plan to establish a solar power project with a capacity of 1,500 MW to overcome power shortage. Land acquisition was done from farmers of the village of NP Kuntamandal of Anandpur district and Galiveedumandal in Kadappa district. Though the land of 11,000 acres was acquired, there was a serious hurdle since the farmers were expecting better / higher compensation than what the government was willing to offer.
5. In states like Telangana, there is 100% exemption on the land acquisition taxes like stamp duty to facilitate the solar developers, but there is no provision of land acquisition by the Government for solar projects. Telangana State Industrial Infrastructure Corporation was the nodal agency for a 1,000 MW renewable energy project proposed in Mehboobnagar district and was supposed to acquire land for the project. Due to the difficulty faced in the valuation/compensation to be paid for the acquisition of the land, Government reduced the size of the project from 1,000 MW to 500 MW.