It’s that time of the year when large swathes of the country are experiencing heat waves driving up power consumption causing power shortages in some places due to lack of coal availability at power plants. Not least because of its environmentally damaging characteristics, this is yet another reason why India must move beyond coal based power generation towards renewable energy, in particular solar power. Indeed, the country is on course to build massive renewable energy capacity. In this article, Meera Subramanian uses the example of a large solar park in Southern India to highlight the opportunities and challenges for building out meaningful capacities in solar power.
The park in question is Pavagada Ultra Mega Solar Park in Tumakuru district in Karnataka. “Here, within millions of photovoltaic panels, lined up in rows and columns like an army at attention, electrons vibrate with energy. The panels cover thirteen thousand acres, or about twenty square miles—only slightly smaller than the area of Manhattan….Pavagada generates almost four times the power of the largest functioning solar farm in the U.S. The world’s biggest solar installation, Bhadla Solar Park, is in the North Indian state of Rajasthan; the second largest is in China. Pavagada, with a capacity exceeding two thousand megawatts, is in the running for third.”
India is blessed with sunlight through out the year and is ideal for solar power.
“India has pledged to meet half of its energy needs with renewables by 2030, and to achieve net-zero emissions by 2070….In 2010, India launched its National Solar Mission, a sun-powered moon shot with a staggering goal: twenty thousand megawatts of installed capacity by 2022. Six months later, in a village several hours southeast of Pavagada, the state of Karnataka opened what was then the nation’s largest solar installation. Built with American solar cells on about fifteen acres of land secured by the government, the panels produced just three megawatts, or a fraction of one per cent of the country’s initial goal. News stories at the time touted its benefits for local farmers, who could use the electricity to operate water pumps and irrigate their fields. Today, the facility seems almost quaint.
By 2015, India was planning solar farms that were hundreds of times bigger. The central government formed an alliance with the Karnataka state government to create K.S.P.D.C.L.; the newly minted solar corporation went looking for a site with thousands of sunny acres and found it near the town of Pavagada, where drought had made growing crops difficult. In the light of hundreds of land conflicts that have erupted across India over the years, the government found a way to avoid buying the site or seizing it through eminent domain. In early 2016, K.S.P.D.C.L. approached landowners with an idea that, according to the corporation, had not been tried on a large scale before: it would lease land holdings for a period of twenty-eight years. Locals, of whom thirty per cent are illiterate, would become landlords and the solar company would become their tenant.
K.S.P.D.C.L. would pay landowners a yearly rent of twenty-one thousand rupees—a few hundred U.S. dollars—for each acre leased. (After the first five years, the rent would increase by five per cent every other year.) The corporation drafted a sixteen-page contract and secured nearly thirteen thousand acres from approximately nineteen hundred owners. Within two years, the company had levelled grasslands, dug up mango trees and coconut palms, and planted hundreds of electricity pylons. According to the solar company’s annual report, it built forty-seven miles of road, lined with twenty-seven hundred street lights, along with eight substations to pool the power for India’s national grid. Using a strategy known as “plug and play,” K.S.P.D.C.L. auctioned off development rights to international corporations such as Adani, Tata, Fortum Solar, and Azure. The developers, which were offered a good rate for each kilowatt of power that they delivered, then installed the panels. By late 2019, Pavagada was lighting up the grid every time the sun shone.
In the race to keep the planet from overheating, this is exactly the scale and speed with which humanity needs to move toward renewable energy. India’s solar program met its original twenty-thousand-megawatt goal four years early, and went on to set higher goals; by 2023, the country had more than sixty thousand megawatts of solar capacity installed.”
Whilst the opportunity is obvious, the article elaborates on the challenges of land sourcing, compromise on land available for agriculture, livelihoods of the community around the park as well as solutions to these issues as experienced with the park in Tumakuru.
If you want to read our other published material, please visit https://marcellus.in/blog/
Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.