Image source: ADB report

Introduction

With the growing demand for renewable energy and India’s ambitious goals to achieve substantial solar capacity, solar parks are becoming a key instrument for clean energy deployment. Solar parks concentrate large solar power generation projects within a dedicated area, ensuring cost-effective energy production by providing infrastructure and regulatory support. These parks address several key challenges faced by solar power developers, including high land acquisition costs, long approval processes, and the need for robust transmission networks. The Ministry of New and Renewable Energy (MNRE) initiated solar park development in India to streamline and accelerate solar energy deployment.

Solar parks serve as a framework for solar developers by mitigating risks, reducing costs, and ensuring better coordination among various stakeholders. This article explores the solar park model, its business structures, and how they can drive sustainable energy growth. It also outlines the major business models for solar parks, emphasizing their financial and operational frameworks.

Understanding Solar Parks

Solar parks are designated areas developed specifically for solar power generation. These areas are pre-equipped with essential infrastructure such as access roads, water supply, drainage, and transmission lines. Solar Power Developers (SPDs) lease land from Solar Park Project Developers (SPPDs) to install and operate solar energy projects. The parks offer a concentrated zone where investors can minimize risk by benefiting from clear regulatory guidelines, pre-developed land, and financial incentives.

Key Benefits of Solar Parks:

• Cost Efficiency: Centralized infrastructure reduces costs per MW and avoids duplication of efforts for each solar project.
• Streamlined Development: The land is pre-approved and cleared for solar development, significantly reducing the timeline for project implementation.
• Reduced Risk: Solar parks provide a controlled environment with guaranteed grid connectivity, minimizing transmission risks.
• Scalability: The parks offer opportunities for larger solar power projects and attract more private investment due to reduced operational risks.

Solar Park Business Models

There are several business models for solar park development. Each model varies in terms of ownership, financing, and operational responsibilities. Below are some of the most common models used worldwide:

1. Government-Led Model

In the government-led model, the government, through its agencies, plays the leading role in acquiring land, developing infrastructure, and managing the solar park. This model is commonly seen in developing countries where large-scale land acquisition and infrastructure development require government intervention to facilitate private sector investment.

• Ownership: The government owns the land and infrastructure.
• Development: Government agencies or state-owned enterprises (SOEs) develop the park.
• Operation: The government or its agency operates and maintains the park, providing facilities to private solar power developers.
• Example: The Bhadla Solar Park in Rajasthan, India, is a key example of this model, where the Rajasthan government has been actively involved in land acquisition and development.

2. Public-Private Partnership (PPP) Model

In a PPP model, the government collaborates with private sector partners for solar park development. The government may provide land and initial infrastructure, while private sector entities contribute capital, technical expertise, and project management.

• Ownership: Joint ownership between government and private entities.
• Development: The government and private sector jointly develop the park.
• Operation: The private sector partner typically takes responsibility for operational activities, while the government ensures regulatory compliance and provides financial incentives.
• Example: Karnataka Solar Power Development Corporation Limited (KSPDCL) is an example where a joint venture between the Solar Energy Corporation of India (SECI) and Karnataka Renewable Energy Development Limited (KREDL) manages the Pavagada Solar Park.

3. Private Sector-Led Model

In the private sector-led model, private developers or companies play the primary role in setting up the solar park. The government facilitates regulatory approvals and policies, but private players handle land acquisition, infrastructure development, and park operation. This model is suitable for regions where private investment is high and there is limited government intervention.

• Ownership: Private companies own and manage the land and infrastructure.
• Development: Private companies are fully responsible for the development process.
• Operation: Private sector entities operate and maintain the park, including coordination with grid operators for power evacuation.
• Example: Adani Renewable Energy Park Rajasthan Ltd (AREPRL) is a joint venture between Adani Group and the Government of Rajasthan for the development of a 1,500 MW solar park, demonstrating a model where private developers lead the process.

4. State-Led with Private Participation Model

This hybrid model involves the state government identifying land and ensuring basic infrastructure, while private developers invest in solar power generation. The state ensures grid connectivity and coordinates regulatory clearances, while private players focus on solar power generation and sale.

• Ownership: State government owns the land, while private developers own the solar power plants.
• Development: The state develops basic infrastructure such as roads and water facilities, and private developers invest in solar generation.
• Operation: Private developers operate and maintain their solar plants, while the state maintains the common infrastructure.
• Example: The Gujarat Power Corporation Limited (GPCL) operates this model for the Banaskantha Solar Park, where the state owns the land, and private developers invest in solar projects.

Key Stakeholders in Solar Parks

1. Ministry of New and Renewable Energy (MNRE): Sets policy guidelines and provides subsidies to promote solar parks. MNRE also coordinates with state governments and central agencies to ensure smooth implementation.

2. State Government: The state government is responsible for identifying land, securing clearances, and facilitating infrastructure development. It may also play a role in leasing land to solar power developers.

3. Solar Park Project Developer (SPPD): The SPPD is the implementing agency that develops the park, acquires land, ensures infrastructure, and coordinates with SPDs and other stakeholders. SPPDs can be state-owned entities or joint ventures with private companies.

4. Solar Power Developer (SPD): SPDs lease land within the park to build solar power plants. They are responsible for generating solar energy and selling it through power purchase agreements (PPAs) to various consumers, including central and state utilities or third-party buyers.

5. Transmission Utilities: State or central transmission utilities ensure the evacuation of generated solar power from the solar parks to the grid. They develop and maintain the necessary transmission infrastructure.

Financial Structure and Incentives

Governments, particularly in India, offer various incentives to reduce the financial burden on solar developers. These incentives include:

• Subsidies: MNRE provides capital subsidies to cover a portion of the solar park development costs.
• Tax Benefits: Developers may receive tax holidays and exemptions, reducing their overall financial burden.
• Guarantees: Government guarantees reduce the risk associated with power purchase agreements, attracting more investment.
• Low-Interest Loans: Public financial institutions offer low-interest loans for solar park development and project execution.

Table: Solar Park Business Models

Business Model	Ownership	Development	Operation	Example
Government-Led Model	Government	Government agencies or SOEs	Government or its agency	Bhadla Solar Park, Rajasthan
Public-Private Partnership	Joint ownership (Govt & Private)	Joint development (Govt & Private)	Private partner with government support	Pavagada Solar Park, Karnataka
Private Sector-Led Model	Private Companies	Private sector	Private sector	Adani Renewable Energy Park
State-Led with Private Participation	State Government owns land, Private developers own projects	State develops basic infrastructure, private sector invests in solar	Private developers maintain solar plants, state maintains common facilities	Banaskantha Solar Park, Gujarat

Challenges and Solutions in Solar Park Development

Challenges:

1. Land Acquisition: Finding large tracts of suitable land for solar parks can be challenging, especially when it involves private land.
2. Infrastructure Development: The high cost and time required to develop necessary infrastructure such as roads, water supply, and transmission lines can delay projects.
3. Regulatory Clearances: Delays in securing clearances can slow down project development.
4. Power Evacuation: Ensuring robust grid connectivity and reducing transmission losses are critical to the success of solar parks.

Solutions:

• Government Intervention: States should prioritize using government-owned barren or wasteland for solar parks to avoid private land acquisition complexities.
• Public-Private Partnerships: PPP models can help mitigate financial constraints and distribute risk between government and private investors.
• Streamlined Regulations: Simplified and fast-tracked regulatory processes will ensure quicker project execution.
• Advanced Grid Technology: Investment in smart grids and energy storage solutions will improve power evacuation and reduce transmission losses.

Conclusion

Solar parks are a cornerstone of India’s strategy to achieve its renewable energy targets. With the right blend of government intervention, private sector participation, and financial incentives, solar parks offer a scalable and sustainable solution for clean energy deployment. Understanding the business models and stakeholder roles is key to ensuring the continued success of solar parks, not only in India but globally.