Energy & Power Environment

Gujarat’s green energy policy will lead to land hoarding

Wind developers have expressed interest over the new land policy for renewable energy announced by Gujarat about a month ago as it does not take 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 opportunity to set up wind projects. Gujarat is a favored 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 made within parks identified by the state, and not at any convenient spot identified by developers as was the case before. The main principles 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,” stated 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 acres of land.

The policy does say that the park developer will have to develop a minimum of 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 proclaimed. Some have questioned 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,” replied 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 getting 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 place 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?” stated 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.”