Solar park costs on the rise in India

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The Indian government recently doubled down and increased the proposed solar park capacity from 20 GW to 40 GW and is providing financial support to the tune of Rs.81 billion (~$1.23 billion) in Central Financial Assistance (CFA) and $100 million (~Rs.6.5 billion) from the World Bank.

Even though all solar parks come under the same policy (solar parks are being developed in collaboration with state governments with Solar Energy Corporation of India (SECI) as the implementing agency), each solar park has a different fee structure which is leading to the varying in tariffs and project costs.According to Mercom’s data, the solar park fee in India varies from Rs.3.73 million (~$58,039)/MW in Karnataka to Rs.10.58 million (~$164,335)/MW in Gujarat.

Land application fees (non-refundable one-time), upfront development charges (one-time), annual leases of land, and annual operation and maintenance (O&M) charges are the most common park fees or charges. However, developers are faced with differing stamp duties in each state and service taxes on all components.

The Rewa Solar Park auction, which resulted in one of the lowest bids has become a model in terms of structuring a solar park fees and executing on infrastructure. There were no upfront park fees, the land lease and internal evacuation infrastructure was built with the World Bank loan. Overall the charges are comprehensive and straight forward according to a developer. These factors helped in the recent record low bids for the 750MW auction.

The Ghani Solar Park in Andhra Pradesh has a high development charge of Rs.4.2 million (~$65,316)/MW. On top of that, there are additional recurring charges for O&M, land leases, water supply charges, and a service charge of 15 percent on all these fees.

The 250 MW Kadapa Solar Park in Andhra Pradesh charges a one-time development cost of Rs.4.12 million (~$63,985)/MW. There is an annual land lease of Rs.1,000 (~$15.5)/acre for developing projects in the Kadapa Solar Park. Developers have to contribute an amount of Rs.0.5 million (~$7,765)/MW at a rate of Rs.0.1 million (~$1,553)/MW per year for five years.

There are three phases of the Bhadla Solar Park in Rajasthan, and the rates differ in various phases as they are being developed by different park development agencies. Projects in the Bhadla Solar Park also have recurring O&M charges, land leases, and a 10 percent escalation per year.

In some states the implementing agency purchases the land and in others they lease the land, stated an official at the Karnataka Solar Power Development Corporation (KSPDCL).

By EB Bureau

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