The “Development of Solar Parks and Ultra-Mega Solar Power Projects Scheme” was introduced by the Government of India in December 2014 under the Ministry of New & Renewable Energy. The initiative aims to facilitate large-scale solar power generation to accelerate the adoption of renewable energy and achieve ambitious capacity targets. Below are the key details and features of the scheme:

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Overview of Solar Parks

• Solar Parks are pre-developed lands equipped with essential infrastructure for setting up solar power projects.
• Challenges of remote project locations include higher costs per MW and increased transmission losses.
• Smaller-scale projects face difficulties such as:
  • High costs for site development, transmission lines, and water procurement.
  • Lengthy processes for land acquisition, clearances, and permissions, leading to extended project timelines.

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Key Features of the Scheme

1. Launch and Objective
   • Initiated in December 2014 by the Ministry of New & Renewable Energy (MNRE).
   • Targeted the development of 25 Solar Parks and Ultra-Mega Solar Power Projects.
   • Original goal: 20,000 MW installed capacity over five years (by 2020).
2. Capacity Enhancement
   • On March 21, 2017, the capacity target was revised from 20,000 MW to 40,000 MW.
   • The new target is to be achieved by 2025-26.
3. Implementation Framework
   • Facilitates the creation of necessary infrastructure for solar power generation across States and Union Territories (UTs).
   • All States and UTs are eligible for the scheme.
   • Solar parks are developed in collaboration with:
     • State Governments
     • Central Public Sector Undertakings (CPSUs)
     • Private Entrepreneurs
   • Implemented by Solar Power Park Developers (SPPDs).
4. Benefits
   • Enables faster project implementation timelines.
   • Reduces development and transmission costs.
   • Streamlines the approval process for land and clearances.
   • Promotes large-scale solar energy adoption to meet India’s renewable energy goals.

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This scheme plays a crucial role in India’s transition to sustainable energy, aligning with the country’s commitment to climate action and energy security.

Who can Apply? 

1. State Governments/UTs

The identification and transfer of appropriate land for solar parks and projects are the primary responsibility of State Governments and Union Territories.They may develop the parks through the State Nodal Agencies (SNAs) or State Renewable Energy Development Agencies.

2. Public Sector Enterprises

Central Public Sector Undertakings (CPSUs) such as NTPC, NHPC, SECI, etc., may develop Solar Parks.In fact, these entities are incentivized to develop Ultra Mega Solar Power Projects in collaboration with state agencies or in an independent context.

3. Private Developers

Private enterprises can apply to develop solar projects by bidding to win projects awarded by government schemes, and/or through negotiations with state governments.Private companies can also partner with a state agency or private entity to participate in the park development.

4. Joint Ventures and Special Purpose Vehicles (SPVs)

State governments, public entities, and private companies may form joint ventures or Special Purpose Vehicles (SPVs) to co-develop parks.These SPVs are sometimes used to bring together funds and resources and manage the development and operation of solar parks.

5. Cooperative and Community-Based Organizations

Certain state-based schemes may allow community organizations or cooperatives to develop smaller solar energy projects and, or pools, develop greater projects and a collective investment.

6. International Developers and Investors

International entities and investors can approach the schemes through direct foreign investment and/or joint ventures as Independent Power Producers (IPPs), mostly for the Ultra Mega Solar Power Project.

7. Renewable Energy Service Companies (RESCOs)

RESCOs may approach for the setup and expected operation of solar parks – particularly in arrangements to have RESCOs own the solar power plant and sell energy to consumers and or grid.

CFA Pattern 

The Ministry provides Central Financial Assistance (CFA) for the purposes of preparing a Detailed Project Report (DPR) of up to Rs. 25 lakh for each solar park, as well as financial assistance of up to Rs. 20.00 lakh per MW or up to 30% of the project cost, including Grid-connectivity cost, whichever is less, after attaining prescribed milestones. The scheme provides various ways of SPPD selection and eligibility of CFA.

Mode	Brief Description	CFA Pattern
Mode 1	The State designated nodal agency or a State Government Public Sector Undertaking (PSU) or a Special Purpose Vehicle (SPV) of the State Government. Central Public Sector Undertakings (CPSUs) like SECI, NTPC etc.	Rs 12 lakh/MW or 30 % of the project cost to SPPD for development of internal infrastructure,and Rs 8 lakh/MW or 30 % of the project cost to the CTU/STU for creation of external transmission infrastructure.
Mode-2	A Joint Venture Company of State designated nodal agency and Solar Energy Corporation of India Ltd (SECI).	Rs 12 lakh/MW or 30 % of the project cost to SPPD for development of internal infrastructure,and Rs 8 lakh/MW or 30 % of the project cost to the CTU/STU for creation of external transmission infrastructure.
Mode-3	The State designates SECI as the nodal agency	Rs 12 lakh/MW or 30 % of the project cost to SPPD for development of internal infrastructure,and Rs 8 lakh/MW or 30 % of the project cost to the CTU/STU for creation of external transmission infrastructure.
Mode-4	Private entrepreneurs with/without equity participation from the State Government	Rs 12 lakh/MW or 30 % of the project cost to SPPD for development of internal infrastructure, and Rs 8 lakh/MW or 30 % of the project cost to the CTU/STU for creation of external transmission infrastructure.
Mode-6	Private entrepreneurs without any Central Financial Assistance from MNRE	No CFA
Mode-7	SECI will act as the Solar Power Park Developer (SPPD) for Renewable Energy Parks	Rs 20 lakh/MW or 30 % of the project cost for external transmission infrastructure only.
Mode-8	CPSU/ state PSU/ Government organization / their subsidiaries or the JV of above entities can act as SPPD.	Rs 20 lakh/MW or 30% of the project cost for internal infrastructure only.

or the JV of above entities can act as SPPD.

In order to obtain financial support, it is necessary to send proposals to MNRE/SECI. As of 30-06-2023, 37,990 MW of capacity has been sanctioned in 12 states with a number of approved parks being implemented.

Legal Issues in Solar Park Development

1. Land Acquisition Challenges and Regulatory Compliance
   • Fragmented Land Ownership: Difficulty in acquiring large contiguous land areas due to fragmented landholding patterns.
   • Inadequate Compensation: Disputes over compensation may lead to litigation.
   • Forced Eviction Allegations: Concerns over displacement of local communities, leading to public opposition or legal challenges.
   • State-Specific Laws: Navigating diverse state laws on land acquisition complicates project implementation.
2. Environmental Impact Assessment (EIA)
   • Ecosystem Impacts: Potential harm to local biodiversity and water resources.
   • Agricultural Disruptions: Solar parks may result in the degradation of fertile land or affect local agricultural practices.
3. Community Engagement and Consent
   • Informed Consent: Lack of proper communication with local communities can lead to resistance.
   • Socio-Economic Impact Mitigation: Ensuring that the livelihood of affected communities is protected.
4. Grid Integration and Transmission Access
   • Infrastructure Challenges: Difficulty in securing grid connectivity for large-scale projects.
5. Regulatory Compliance
   • Complex Approvals: Navigating intricate regulatory frameworks for clearances and permissions.

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Risks in Solar Park Development

1. Regulatory Risks

• Policy Changes: Alterations in government policies can affect project feasibility.
• Land Acquisition Issues: Bureaucratic hurdles, local resistance, and legal disputes delay projects.
• Permits and Approvals: Delayed approvals extend project timelines.

2. Financial Risks

• High Initial Investments: Large capital requirements and financial uncertainties affect funding.
• Tariff and Currency Risks: Revenue fluctuations due to tariff changes or currency instability.
• Credit Risks: Defaults in honoring Power Purchase Agreements (PPAs) can result in financial losses.

3. Technical Risks

• Grid Integration: Challenges in aligning with existing grid systems.
• Technology Obsolescence: Rapid advancements can render current technology outdated.
• Performance Issues: Equipment failures, panel degradation, and lower-than-expected solar irradiance.
• Storage Costs: Expensive and evolving storage technologies.

4. Environmental and Social Risks

• Ecological Impact: Land degradation, habitat disruption, and increased environmental risks.
• Water Stress: High water usage impacts local supplies.
• Community Opposition: Resistance due to land use concerns, environmental implications, or lack of regional benefits.
• Climate Risks: Extreme weather events can damage equipment and disrupt operations.

5. Operational and Management Risks

• Supply Chain Disruptions: Delays in materials and equipment impact project timelines.
• Skilled Labor Shortages: Affects quality and efficiency of construction and operations.
• Maintenance Challenges: Necessity for effective operations and maintenance strategies.

6. Legal Risks

• Contractual Disputes: Breaches in agreements can lead to litigation.
• Compliance Costs: Meeting local, national, and international regulatory requirements adds complexity and expense.

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