Gujarat’s New Land Policy for Solar, Wind Projects to Make Developers More Accountable

The developers will have to install 50% of the slated capacity in three years and 100% in five years

September 17, 2020


The state government of Gujarat has issued amendments to its wasteland allotment policy for wind, solar, and hybrid (wind and solar) power projects.

According to the amendments, the renewable power project developers selected by the Solar Energy Corporation of India (SECI) will have to commit to install of 50% of the total generation capacity in three years and 100% in five years. Apart from this, all the other land allotment policy conditions issued on January 25, 2019, will be applicable.

The amendments said that 50% of the electric capacity is to be installed within three years of the agreement of land allotment, and 100% should be generated within five years of the contract. The park developer can sub-lease it to any other project developer after developing the park or can choose to be the project developer. In either case, the park developer would be liable to pay the rent to the government.

Further, the park developer will have to submit an amount of ₹200,000 (~$2,717)/MW within one month of the approval of the land allotment. If the developer wants to deposit a security deposit for lesser capacity than was applied, they would have to pay a security deposit for 500 MW as per the amended hybrid power park policy.

This security deposit will be refunded without interest when the commissioning of the earmarked capacity is completed. If the developer installs lesser capacity than was allotted for the stipulated time, their security deposit for that capacity will be forfeited.

The amendments mention that for the renewable energy parks, the land lease tenure will be 40 years. The first five years will be for the development of the park, and 35 years for the generation of renewable energy. After 40 years, the park developer will return the land allotted on lease to the government.

For the land allotted by the government, the developer will have to submit an amount of ₹15,000 (~$204)/hectare (1hectare=2.47 acre) per year rent and other taxes from the date of handing over the land possession. After that, every three years, there will be an increase in rent at the rate of 15%. The park developer should pay the annual rent and other taxes in advance. After 90 days from the due date, 12% simple interest would be charged. Then, if the developer fails to deposit the rent with interest in 24 months, the allotted lease will be vested to the government.

The state government made it clear that at the time of handing over the possession, an agreement must be arrived at between the developer, the collector, and the nodal agency. At that time, the park developer will have to pay the amount of one-year rent in the form of a deposit and 1% of the service charge along with stamp duty.

The amendments further specify that 100% of the project capacity should be installed on the land allotted on lease by the end of five years. A review of the project would be done at the end of five years.

“If a developer is allotted land for 1,000 MW and if at the end of the tenure of initial three years, instead of 500 MW, only 300 MW is installed, then after the completion of the tenure of initial three years the capacity of the renewable park will be reduced to 800 MW, and the necessary land required for that capacity will be kept in possession of the developer. The remaining land will be taken back by the government,” the notification elaborated.

In February this year, the Ministry of New and Renewable Energy (MNRE) issued a notification to set up 50 GW of ultra-mega renewable energy parks in Gujarat and Rajasthan. The ultra-mega parks with a capacity of 25 GW each will be located at Khavada in Gujarat and Jaisalmer district in Rajasthan. The ministry added that land would be made available to the developers for setting up of solar, wind, and solar wind hybrid projects at these locations.

Last year, the state government of Gujarat modified its land laws relating to the development of wind and hybrid (wind and solar) parks in the state. This law was brought into effect, keeping in mind the central government tender projects can be set up anywhere in India.

Mercom has previously written about how land is still the biggest impediment in large-scale solar development. Read the full report here.