4000 MW of Wind Projects Stay Stranded in Gujarat deadlock

4000 MW of Wind Projects Stay Stranded in Gujarat deadlock

A Strange game of non cooperation and poor coordination in Gujarat has trapped projects worth 4000 MW in red tape.

Media had reported in December 2018 about, the Gujarat government’s intransigence regarding projects allotted before its new land policy for wind projects comes up. The policy, which was announced in July 2018, has led to close to 4000 MW of projects being stuck, as developers obviously favoured the climatic conditions in the state for their projects, after winning at multiple SECI auctions for wind energy. These are mostly winners from the Tranche 1 to 5 wind auctions of SECI.

Wind Projects

While the state government has indicated that the policy change was necessitated by the ‘unplanned’ spread of wind turbines across the state, it has also indicated that going forward, it would allot land to developers itself, based on location as well as the quality of land itself, with the government in favour of using more ‘waste’ or non agricultural land.  While this seems to make sense, there is an obvious issue of the status of the projects in a queue from before, where the state government has made no move, or indication to offer clarity.

Further, project developers used to work through land ‘aggregators’, who would buy the land on their behalf, and then sub-lease/sell it to them. Now, the state government has made it clear it will not work through ‘aggregators’ or allot them land. Land would be allotted only to bid winners, throwing a spanner in the works for an established process. Dec 24 was the deadline for Tranche 3 winners worth 1700 MW to show that they had the land agreements in place. With no such agreements, the whole parcel’s commissioning date has had to be extended. Even in the new policy, the process takes close to 9 months or more, so even if there is a resolution, further delays look inevitable.

Most importantly,  these stuck projects, or a vast majority of them, simply cannot move arbitrarily to the new policy regime, thanks to the deals developers have already closed arrangements with substations along with LTA’s (Long term access ). Relinquishing these would cost anything between Rs 30-40 crores for these, according to a person at SECI.

It had been reported that the state was actually trying to favour projects of the state energy entity, Gujarat Urja Vikas Nigam Limited, over those bid out by the central entity, SECI, but the state officials deny this. Without any action to show otherwise on the ground for the stranded projects.

For SECI, which is eventually responsible for the targets being met, extensions for commissioning are causing anxiety now, as no resolution is in sight. As of now, a 9-12 month delay is a given for these projects.

Gujarat and Tamil Nadu happen to be among the top states for wind power potential in the country, and this was the last issue developers expected in Gujarat, which had earlier had one of the smoothest and acquisition policies for Wind Energy. Cheap land, along with a clear policy for the past decade had made it a favourite for developers. With land prices climbing in Tamil Nadu too, the Wind Sector could find itself being buffeted by more than just political volatility in 2019. Even as these issues do nothing to help the country achieve its larger 65 GW target for Wind Energy capacity by 2022.

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