Gujarat’s green energy policy will lead to land hoarding, fear small firms

Wind developers have expressed concern over the new land policy for renewable energy announced by Gujarat about a month ago as it does not make possession of a power purchase agreement (PPA) mandatory while applying for land to set up a project in the state. 

They fear that without such a provision, land could get locked up by some developers denying others the chance to set up wind projects. Gujarat is a favoured destination of wind developers, with high wind speeds available, especially in the Kutch area. 

The new land policy states that all future renewable projects will have to be built within parks identified by the state, and not at any convenient spot identified by developers as was the case before. The main criteria for applying for land within the parks are that the developer should have either a manufacturing base in the state or an operating capacity of a minimum of 250MW. 

“But a PPA is not required,” said a developer on the condition of anonymity. “I can buy land and do nothing with it, or sell it later at double my cost. Land brokers are doing that already in some of the states which have good wind sites. They capture such land and dictate the price.” Every megawatt of wind energy set up needs around 0.75 acre of land. 

The policy does say that the park developer will have to develop a minimum 50% of the allotted land within five years and 100% within 10 years. But that still leaves ample scope for misuse. 

Many developers have sent in applications to lease land in Gujarat since the new policy was announced. Some have asked for land to construct projects up to 10,000MW, the maximum limit specified by the policy, which they surely do not immediately have projects for, according to sources close to the development.

“Applications are being collected at the local level. They have not reached us yet,” said Pankaj Joshi, additional secretary in Gujarat’s revenue department, when asked how the government would prevent land being locked up. 

Gujarat Power Corporation Ltd (GPCL), the nodal agency that will process the applications, could not be reached for comment. 

A lease rent of Rs 15,000 per hectare will be applicable at the time of taking possession. 

Following the new policy, new or small sized developers with no record of operating capacity or a manufacturing unit will not be able to set up units in Gujarat any more, even if they have won PPAs at wind auctions. 

“Large developers will lock in the best resource in the country. What will the rest of us do?” said one of the smaller developers. “Developers will have to go to states like Andhra Pradesh and Karnataka, which will cost them more. This will increase the wind tariff. If land prices rise in Gujarat with land being locked up, the overall effect again will be higher tariffs. I am upset because I am a new independent power producer (IPP) and I am going to be locked out of Gujarat.” 

However, there were differences among developers too about the merits of Gujarat not insisting on PPAs. “Gujarat wants to encourage only larger players who can build large projects, which alone can provide scale and thereby bring down costs and as a result, tariffs,” said another developer. “The state wants competitive tariffs and that is fair. It does not want the smaller players.” 

sources@economic times