New Delhi: While the cost of land constitutes a relatively small portion of the overall capital expenditure (capex) required for setting up solar energy projects, renewable energy industry developers in India recognize its critical role in reducing the overall project costs.
Sharad Pungalia, Managing Director and Chief Executive Officer of Amplus Solar, highlighted that while land cost may represent a minor percentage of the total capex, its optimization can significantly impact the overall cost-effectiveness of solar projects. He emphasized that efficiency in land procurement or lease rental negotiations is a key driver, along with site selection and efficient space utilization.
Land cost optimization for solar projects in India involves a multifaceted approach, encompassing factors such as strategic site selection, maximizing land utilization, adhering to regulatory requirements, and meticulous planning.
Kapil Kasotia, Chief Operating Officer for Utility Business, Wind, Hybrid, and Strategic Initiatives at AmpIn Energy Transition, emphasized that striking the right balance between location, quality, and price is crucial for optimizing land costs.
To achieve land cost optimization, developers must carefully assess various land-related factors, engage with local authorities, and employ strategies aimed at minimizing land expenses while ensuring project efficiency and regulatory compliance.
Sumit D Chowdhury, CEO of Hydreen, noted that land and solar panels are the major cost components for solar energy projects. With solar panels’ costs already reduced significantly, attention has shifted to reducing land-related expenses to make solar power more economically competitive.
The National Electricity Plan 2023, issued by the Central Electricity Authority, recognizes land as a vital resource for solar power plants, following solar irradiation. The adoption of higher-capacity solar modules has contributed to a reduction in land requirements for solar projects.
The NEP further highlighted challenges related to land availability, legal issues in land transfer, and complexities associated with land acquisition for large-scale solar power projects.
Delays in land acquisition can lead to project timeline setbacks, resulting in increased Interest During Construction (IDC) costs and Liquidated Damages (LDs), which significantly affect project economics. Developers often prioritize convenience and streamlined land procurement processes over cost considerations.
Additional challenges for power projects include issues related to inadequate land records, unclear occupier status leading to compensation disputes, variations in cost implications across states, landowner resistance, price negotiations, legal and regulatory compliance, community displacement, environmental concerns, land title and ownership issues, and land fragmentation.
In conclusion, while land cost may appear minor in comparison to other project expenses, its optimization plays a pivotal role in making renewable energy projects more economically viable and sustainable in India.
Source: Economic Times
