Madhya Pradesh: The preferred new investment destination for solar in India

24 October 2014 |

Madhya Pradesh has emerged as the preferred state for new solar investments, overtaking earlier favorites Gujarat and Rajasthan. With close to 322 MW[1] of solar capacity installed, MP is now ranked third after Gujarat and Rajasthan in cumulative terms. Interestingly, about 96% of this was added only in the last two years (2013 and 2014), the highest among all states. Key drivers for this growth are:

  •  The transmission and losses charges in Madhya Pradesh (about INR 0.62 / USD 0.01), are lower than in most other states
  • The state government is offering land at almost free of cost to solar power developers and has introduced a “right to use” concept for government land to reduce the time and cost of land allotment
  • To avoid delays, the state government has also simplified the process of clearances, approvals and inspections for setting up solar plants

 Other reasons, which are conducive to solar sector growth in MP are: the rise in power demand and the supply gap with a high peak energy deficit of (8-10%)[2], good sites and irraditaion (5.5-5.8 kWh/m2). A digital land database for several thousand hectares, accessible to developers, makes site identification easy. Bureaucratic processes were streamlined.

Source: Bridge To India analysis

[1] Bridge to India Project Database

[2] Source: Central Electricity Authority

The state aims to take the total installed capacity to 2,654 MW by 2017. A number of large solar projects are currently planned in Madhya Pradesh. These include one “ultra mega solar power plant” (UMSPP) of 750 MW to be set up by NTPC in the district of Rewa. About one-third of JNNSM-II projects have been allotted to developers wanting to construct in MP. Recently, the Minister of Power, Shri Piyush Goyal, said that if the state government provides land, Coal India Limited, too, would set up a 1,500 MW solar plant in MP.

Another indicator of the attractiveness of MP to solar developers is that when, recently, Tata Power Delhi Distribution Pvt Ltd invited proposals for 750 MW of solar plants under the “open access” system, most bidders chose Madhya Pradesh as a location for their plant. Azure Power, which opted for Rajasthan and submitted three bids with two plants of 40 MW each and another of 20 MW, was rejected, mainly because of the high transmission and losses charges in Rajasthan, which makes the landed cost of solar power from Rajasthan higher than from Madhya Pradesh (despite a slightly higher irradiation).

 Jyoti Gulia is Senior Manager, Market Intelligence at BRIDGE TO INDIA

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