PSUs turn to joint ventures with states to beat land hurdles in solar projects

“We are doing joint ventures with Rajasthan, Andhra Pradesh, Madhya Pradesh, Maharashtra and Chhattisgarh. There will be participation ranging from 26 per cent to 49 per cent, the State will help with the land,” it added.

At least three PSUs — National Hydroelectric Power Corporation (NHPC), Satluj Jal Vidyut Nigam (SJVN), and NGEL — have floated such state-specific JVs to set up solar projects across the country.

A senior official from one of the public sector undertakings (PSUs) told The Indian Express that partnering with states through JVs gives the latter a direct stake in project execution and outcomes, helping smoothen land acquisition.

“We bring the project expertise and the investment, while the state provides the land. Since land is a state subject, working together allows us to monetise the land which was lying unmonetised for years,” the official said.

Queries were sent to the Ministry of New and Renewable Energy (MNRE), NHPC, SJVN and NGEL. Repeated attempts to reach them through messages and email did not elicit any response till the time of filing this report.

The PSC on energy, in its recently released report, noted that such JVs allow better coordination with state governments on land-related approvals and disputes, reducing litigation and avoiding long pre-construction delays.

Land acquisition challenges

Land acquisition is one of the important steps in the timely development of utility-scale solar projects as it requires vast tracts of contiguous land. A utility-scale solar installation typically requires around 4-7 acres of land per megawatts (MW). According to submissions by the MNRE to the parliamentary panel, there will be a requirement of between 1.4-2 million hectares of land to harness the country’s full potential.

However, land acquisition has become the biggest hurdle in realising the country’s solar capacity given India’s limited availability of surplus land. In August, a Comptroller and Auditor General of India (CAG) report also flagged that the primary reason for the non-establishment of the required capacity of solar projects was the non-availability of the required land or delays in land acquisition.

The MNRE informed the parliamentary standing committee that much of the land suitable for solar projects overlaps with agriculturally productive or ecologically sensitive areas, putting it in direct competition with food security and conservation needs. This was further compounded by fragmented land ownership and legal hurdles associated with compensation and levies.

Notably, land is a state subject, so, the compensation and levies vary from state to state, depending on the District Level Committee (DLC) rates.

SJVN, meanwhile, informed the PSC that one of the key reasons for delay in solar projects is securing large, contiguous land parcels near existing grid connectivity. It added that even where suitable land is available, grid access through the Inter-State Transmission System (ISTS) is often unavailable or delayed beyond 2027.

The PSU also highlighted that delayed land acquisition and subsequent delayed project development has led to breach of stipulated timelines and forfeiture of bank guarantees (BGs).

Government land as a solution

While PSUs are developing their own model to overcome land acquisition challenges, the MNRE told the PSC that identification of government land by state governments is the simplest way to expedite availability of land for renewable energy projects. It maintained that the utilisation of government land would streamline the land acquisition process and help reduce delays in project implementation.

The MNRE also added that it has been urging state governments to identify large tracts of government land for renewable energy projects, and where such land is unavailable, identify suitable private land for installation.

The PSC, in its recommendation, called for the creation of a ‘single-window clearance mechanism’ that would bring together all relevant central and state stakeholders, enabling quicker identification of land-related issues and their time-bound resolution.