Solar Developers in Gujarat Get Extension to Complete Projects

Developers of projects under construction in India’s largest solar program have been given a month’s extension to complete their plants without losing their preferential payment rates.

The deadline for all projects has been extended until Jan. 28, after which the above-market rates to be paid for their power will no longer be applicable, S. B. Patil, executive director at the state-run Gujarat Energy Development Agency overseeing the solar program, said yesterday by phone.

Gujarat promoted solar plants by promising to provide sites, distribution infrastructure and quick approval to projects built in its designated solar park. The state electricity regulator pledged to pay 15 rupees (28 cents) a kilowatt-hour for 12 years, about three times the wholesale market rate for power, to photovoltaic plants completed by the extended deadline. It plans to lower that rate by as much as 32 percent after this date, according to a draft proposal on its website.

India, the world’s third-biggest energy consumer, plans to become one of the fastest-growing solar markets by building 20,000 megawatts of capacity by 2022. Gujarat was the first Indian state to invite companies to build sun-powered plants in the country, and how it deals with delayed projects may set a precedent.

More than 900 megawatts of photovoltaic plants were supposed to be built by Dec. 31 in the state, according to contracts signed by companies including Adani Power Ltd. (ADE), Lanco Infratech Ltd. (LANCI), Tata Power Co. (TPWR), and GMR Infrastructure Ltd. (GMRI) with the state electricity distributor. Companies had to post a deposit of 5 million rupees for each megawatt of capacity they won, which would be forfeited if they failed to build their plants on time.

Extension Hearings

In December, the regulator held at least 45 hearings with developers, including Tata Power and GMR, that sought an extension of the deadline, according to a list of hearings on the website of the Gujarat Electricity Regulatory Commission.

Some developers, including World Bank-backed Azure Power India Pvt., Welspun Energy Ltd. and Green Infra Ltd. have already completed their projects. Others sought extensions because of delays in acquiring land and heavy rains that blocked access to sites, according to letters sent to industry group Solar Energy Association of Gujarat obtained by Bloomberg News.

Astral Power Pvt., which is building a 25-megawatt plant using First Solar Inc. (FSLR)’s thin-film panels, said it was awarded land only on Oct. 2 after the location was changed three times by authorities. That delayed shipment of panels and equipment until late December because it couldn’t obtain a letter of credit from lenders until it secured land, according to Astral’s letter to SEAG. Similar difficulties were echoed in letters by Inspira Infrastructure Ltd. for its 15-megawatt plant and Surana Group for its 5-megawatt facility.

MBH Power Pvt. doesn’t expect to complete its 1-megawatt plant until Feb. 28 because of land acquisition delays, heavy rains that blocked access to the site and difficulties with distribution infrastructure, it said in a letter.

D.J. Pandian, principal secretary of the state’s Energy & Petrochemicals Department, didn’t to respond to calls and e- mails requesting comment on whether the tariff would be extended or companies would be fined for delays.

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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