The Indian government is reportedly planning to rope in public sector companies to set up large-scale renewable energy projects on the lines of the ultra mega power projects program launched a few years back.
According to media reports, the central government is planning to assign targets to public sector companies to set up large-scale renewable energy projects with capacities of up to 1.8 gigawatts each. The government may allow the companies to choose the power generation technologies to be installed at these projects.
Public sector companies owned directly by the central government and working in the power sector may form joint ventures with various state governments to set up these projects. Some of these companies could be NTPC, Solar Energy Corporation of India, NHPC, and Power Finance Corporation.
The public sector companies may collaborate with the state governments to identify and acquire land for these projects in order to keep the capital cost expenditure, and the tariffs, as low as possible. Installation of power plants shall be done by private project developers but a major change from several current tenders would be the deep involvement of the central public sector companies in the entire process which would add promote confidence among bidders and developers.
In order to ensure that state governments cooperate in land identification and acquisition, some revenue may be set aside for the states linked with the actual annual generation from these projects.
This ultra mega renewable energy project program, though not officially announced, seems to be in line with a similar program launched by the Indian government to set up coal- and gas-based power plants across the country. Under this program, launched in 2005, the government had planned to set up 15 power plants of 4 gigawatts of capacity each. The government managed to auction only four such projects and only two could be operationalized. While the operational power plants are much more efficient than conventional thermal power plants and are also among the cheapest coal-based power plants, the future of the other 13 power plants remained uncertain.
India already has a program that aims to set up 12 gigawatts of solar power capacity through public sector companies. This program has been designed to help and promote domestic solar cell and module manufacturers. However, the response to the tenders issued under this program has so far been quite poor.
Additionally, there is an ongoing program to set up solar power parks across the country with a cumulative capacity of 40 gigawatts. Several success stories have emerged through the implementation of this program. The added modifications to the proposed program — involving public sector companies and offering incentives to state governments to aid the land acquisition — could prove game-changers.