In the recently concluded bidding for 750 MW of projects under the JNNSM Phase 2 Batch 1 projects(details here), Rajasthan bagged 50% of the total capacity(375 MW). While this was expected, what has come as a mild surprise is that Madhya Pradesh bagged one-third of the total projects(250 MW). The rest of the 6 states including Gujarat and Maharashtra together could get only about 17% of the total capacity.
It may be recalled that Gujarat has the maximum share (39%) in the total installed capacity in India as of 31 January 2014 according to MNRE. It is closely followed by Rajasthan with 30% share(More details here). (According to NRED, the total installed capacity in MP was 402 MW at the end of December 2013, while MNRE figures show 195 MW).
Interestingly, Madhya Pradesh has the largest solar PV plant in the country. The plant is a 130 MW plant in Neemuch, developed by Welspun Energy Ltd(Details here). The first plant under the REC mechanism(by M&B Switchgears Ltd) was also commissioned in Madhya Pradesh. The
What are the possible reasons for Madhya Pradesh to emerge as an attractive solar destination?
The reasons are many.
a. A pro-active administration – The New and Renewable Energy Department(NRED) of Madhya Pradesh has been very aggressive in promoting renewable energy policies, especially for Wind. The state was a late comer to the Solar sector, but according to the S.R. Mohanty, Principal Secretary, NRED, it also helped the department formulate policies that included positives of other state policies while avoiding the mistakes of others.
b. Attractive Solar Policy – The state’s solar policy provides the following incentives
- No electricity duty and electricity cess for 10 years
- Wheeling charges reduced to 2%
- Third party sale permitted
- 100% banking
- Contract demand reduction
- No VAT and no entry tax
- Benefits of industry status
- Stamp duty exemption on pvt. land purchase
- Freedom to identify suitable land
- Bankable document for government land
- Government land for 25 years
c. Land acquisition and management – The solar policy makes it easier to acquire land, which is perhaps one of the biggest considerations for a developer in choosing to locate a plant in a particular state. Many of the bidders we spoke to mentioned that land acquisition is much easier and hassle free compared to Rajasthan where it is becoming increasingly difficult to manage land issues.
The Madhya Pradesh NRED estimates that the solar installed capacity will add another 1 GW by May 2015 taking the installations to 1447 MW by that time. The allocation of 100 MW recently was in that direction(more here).
With favorable policies, ease of land acquisition and availability of infrastructure and the support of a pro-active administration, Madhya Pradesh is set to become the next big solar destination.
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