Establishing solar and wind projects to fulfill the Indian government’s goals is hampered by challenges associated with land acquisition. These projects often face hurdles arising from procedural delays, environmental factors, and social tensions.

The bigger challenge for project developers is cracking the puzzle of land records. Land ownership is plagued by a glaring disconnect between official documentation and ground reality. This has resulted in renewable energy projects getting drawn into legal battles over land ownership and usage.

The process of examining and reconciling land records requires physical demarcation of land, often stretching over weeks or even months, due to inadequate documentation and discrepancies. This, in turn, delays projects initiating commercial negotiations and stretches completion timelines.

The fragmented nature of land records, scattered across different departments at the district or village level, further complicates the process.

According to Balveer Choudhary from First Engld Consulting, a land acquisition advisor commented on the complexities involved, “Land records are disorganized and are often spread across district or village departments. Untangling the intricate web of paperwork becomes tough, as it demands sifting through years of records to verify ownership. This complicated process leads to inefficiencies that add to project delays.”

The outdated information in land records maintained by different departments worsens the situation.

Challenges extend even to securing physical possession of designated land parcels and delineating land ownership within specific villages. The existence of disparate records maintained by authorities in adjacent villages causes overlaps.

According to Choudhary, navigating the challenges demands a collaborative effort involving all current and former ‘Patwaris’ (government officials who maintain land ownership records) overseen by the district collector. This comprehensive approach ensures the accuracy and accessibility of registered land measurements. The engagement of local officials like the tehsildar, sub-divisional magistrate, and local Patwari is key in effectively executing the process of demarcating land boundaries.

According to advocate Shreevidya Nargolkar, an associate with Neeti Niyaman, a regulatory advisory law firm, there is a need to expedite the availability of documents. She suggests that processes like obtaining documents, verifying encumbrances or charges on land, and accessing translated versions of documents should be streamlined.

Setting up e-data centers could be of help, according to her. “A centralized repository could collect information and data from every state, making it easily accessible to all stakeholders involved.”

Ensuring a seamless land acquisition process involves a series of meticulous steps, stated Ranjeet Singh, a land acquisition expert. “Examine the title document or revenue records for potential red flag items. Confirm that the landlord legally possesses the land with full alienation rights. Ascertain if the land is encumbered to a bank or farmer’s cooperative. Check for any ongoing title litigations concerning the land. Scrutinize the chain of transfer and devolution of land title for the 30 years preceding acquisition.”

Due to the complexities involved, many renewable energy developers depend on third-party land aggregators.

“For developers, the choice of whether to engage a vendor or manage tasks in-house significantly impacts the process, underlining the role of competent facilitators in mitigating issues. Determining whether to purchase or lease land hinges on financial models and project dynamics. This balance can vary, with around 30% earmarked for purchase in some scenarios. Wind projects, requiring thorough pathway planning, differ from solar, where pathways and land ownership intricacies overlap,” Singh said.

Project financing is influenced by land legality, history, and adherence to norms. The choice between outright purchase and lease can influence a lender’s decision to finance projects.

Adding to the complexities, projects sometimes run into opposition from the local community, with conservationists also jumping into the fray.

To streamline the project development process, the Indian government introduced the solar parks program in 2014. These parks promised ready-to-use land, infrastructure, and guaranteed offtake, offering a lifeline to developers weary of lengthy approval processes. This approach saves time, allowing developers to construct projects under a plug-and-play model. The program initially aimed to set up 25 solar parks and ultra mega solar power projects with 20 GW capacity within five years, later upping the target to 40 GW by the extended timeline until March 31, 2026.

According to Shreevidya, navigating the challenges posed by land conversion, complexities in aggregating land parcels, rising land costs in project zones, limited capacity for evacuation near project sites, encroachments, village right-of-way disputes, and the lack of accurate revenue records for land earmarking represents a formidable battle for project developers.

However, developers can adopt a few measures before the power purchase agreement is signed. These measures involve meticulously submitting documentation to establish undisputed ownership or utilization rights over the required land, aligning with the name of the solar power generator or its affiliated entity.

Shreevidya underscores that while these prerequisites operate as vital buffers to reduce risk, they can inadvertently cast a shadow of entry barriers across the renewable energy market. Bidders might interpret these requirements as potential risks, influencing their willingness to participate actively.

Developers have had to grapple with the lack of uniformity across states in policies related to land acquisition.

While Punjab, Haryana, and Uttar Pradesh extend a complete 100% stamp duty exemption, Madhya Pradesh offers a 50% exemption. In Rajasthan, developers must pay 25% of stamp duty, which is returned once the project is commissioned. Meanwhile, most other states have yet to introduce such exemptions.

“Madhya Pradesh, Punjab, and Rajasthan permit land use conversion to deemed non-agricultural status without imposing fees. In contrast, Andhra Pradesh and Telangana charge for these conversions. Elsewhere, separate permissions from district commissioners, town planning departments, or revenue departments are needed for conversion to non-agricultural status. These exemptions could give some relief to developers in states where land acquisition has been a major stumbling block,” Choudhary said.

The Ministry of New & Renewable Energy has an ambitious plan to tender 50 GW of renewable projects annually for the financial years 2024-28, including at least 10 GW of wind.

Land acquisition for solar and wind projects has become extremely challenging and threatens to slow down the progress toward achieving the 2030 goals set by the government.

Policymakers must find a way to ensure some uniformity around land acquisition regulations if India has to reach its renewable energy goals.