The Uttar Pradesh government has decided to attract private investment in the solar power generation sector by offering competitive tariff to those willing to establish such plants in 13 months’ time, with the condition to directly sell power generated to UP Power Corporation Ltd for 10 years.
New and Renewable Energy Development Agency (NEDA) has been given the task to take up “tariff-based competitive bidding” for purchase of 200 MW power from solar photovoltaic projects to be established in the state.
At present, solar power generation in the state is only around 13 MW that comes through small projects and the average rate provided for purchase through grid is around Rs 5. However, in the competitive bidding, the companies will offer tariff at which they will be able to provide solar power to the state, taking into account their investment.
The UPPCL will then enter into a 10-year power purchase agreement with the firms offering the lowest tariffs. A similar model for solar power projects is adopted in states like Madhya Pradesh, Orissa and Tamil Nadu. While Gujarat, a leader in the field, offers around Rs 15 per unit for solar power, states like Rajasthan offer land as an incentive.
In the first phase, Uttar Pradesh has decided to only offer to bear the expenditure on the construction of transmission line and substation for projects that will come up in the Bundelkhand region. For the rest of the state, this cost will be borne by the developer. Sources said that in the pre-bid meeting that took place recently, some of the companies demanded that land also be given by the state government on lease basis as an incentive since land acquisition is a cumbersome process.
But the state government, which is still in the process of finalising its new land acquisition policy, has decided that applications of only those investors would be accepted who would present either “land lease” or “land purchase document”. The developer will be required to show that he is in possession of at least two hectares of land for generation of every megawatt solar energy.