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    Solar power majors get $3-billion shock from Supreme Court order

    Synopsis

    Developers estimate the total cost to change the existing overhead wires to underground cables at ₹22,000 crore (approximately $3 billion), requiring a tariff hike of 10-15% if they have to bear this entire cost, industry insiders said.

    Solar-parkAgencies
    Emails to SB Energy, ReNew, Adani Green, Acme Solar, Hero Future Energies and NTPC were not answered till press time on Monday.
    A Supreme Court order that requires overhead power lines to be taken underground in the habitats of a critically endangered bird is likely to hurt the financial viability of solar projects in Rajasthan and Gujarat. Developers estimate the total cost to change the existing overhead wires to underground cables at Rs 22,000 crore, requiring a tariff hike of 10-15% if they have to bear this entire cost, industry insiders said.

    The companies developing projects in the region are among the biggest in the business, including Adani Green, ReNew Power, Hero Future Energies, SB Energy, Greenko and state-run NTPC.

    The solar industry association now plans to approach the Supreme Court, seeking at least a partial relief on the order, as laying high-voltage cable underground is not feasible, they said.

    The two states, which house many solar power projects, including the world’s largest at Bhadla in Rajasthan’s Jodhpur district, account for about a quarter of the total solar power production in India. The regions that house the projects are also habitats of the Great Indian Bustard (GIB), a tall and heavy bird with a wingspan of more than two metres. Only around 150 of these birds exist, according to wildlife experts, and some 15% die every year due to electrocution.

    On January 9, ET reported the National Green Tribunal’s order directing the Centre and the two states to install bird diverters on all existing power lines within four months.

    Feasibility Report for Change

    NGT also directed laying all new transmission lines underground to prevent more GIB fatalities. However, last month, the apex court ordered that all transmission lines, including existing ones, be made underground.

    “If the court does not review the decision and if (it) is implemented in toto, then it would bleed the industry and make the projects unviable,” said a top executive at one of the affected companies. “Further, it is noteworthy to mention that no further projects would be feasible to be set up in Rajasthan, which is the most promising area in India for the growth of solar.”

    As per the discussions at an interaction last week between the ministry of new and renewable energy (MNRE) and solar industry representatives, low-voltage lines of 33 kV will cost Rs 84 lakh per kilometre to take underground, while for high-voltage lines of 220 kV, expense will be as high as Rs 28.8 crore a km. More than 2,500 kilometres of cables, including both high- and low-voltage, have to be laid underground as per the court ruling.

    Emails to SB Energy, ReNew, Adani Green, Acme Solar, Hero Future Energies and NTPC were not answered till press time on Monday. MNRE officials and representatives from the Gujarat and Rajasthan governments also did not respond to queries. Tata Power declined to comment.


    ETD-1-11052021

    Priority & Potential Areas
    Based on a 2019 report by the Wildlife Institute of India, the flight path of the birds — which are only seen in India and some parts of Pakistan — has been divided into ‘priority’ and ‘potential’ areas.

    While the priority area will affect the solar projects by Adani Green and SoftBank-backed SB Energy, the potential area, which demarcates parts of west Rajasthan, will cover the 5,700-hectare Bhadla Solar Park.

    Other players such as Tata Power Renewables, O2, Vena and Greenko will also be affected due to the geographical expanse of the potential area, which stretches from the western border of Rajasthan to Barmer, Jodhpur and Bikaner.

    Wildlife conservationists said that if implemented in a timely manner, the steps ordered by the top court would reduce the death of these birds caused by powerline collisions. “(This) should become the norm for greener power lines across all bird migratory pathways within protected areas and near wetlands,” said Yadvendradev Jhala, dean, Wildlife Institute of India.

    Technical & Cost Challenges

    There are technological and implementation challenges in laying underground high voltage transmission lines, said Shekhar Dutt, director-general at the Solar Power Developers Association. “It is also felt there is very little impact of overhead transmission lines on GIB in potential areas, so high-tech bird diverters can be selected in consultation with experts which can be very effective," he added.

    Another industry executive, who did not want to be named, said the Rs 22,000-crore cost figure might be a conservative estimate, as it accounted for only laying underground 220 kV lines. “There are lines that go up to 400 kV and above that haven’t yet been taken into account,” this executive said.

    State and central governments will bear some costs of the undergrounding, as they have "a duty cast to preserve the endangered species,” as per the court order. They may pay for the transmission lines between the substations and end consumers, but developers will still bear the brunt — between the solar plant and substation, which makes up nearly 80% of the entire system.

    While cost will go up, developers will get relief due to the ‘change in law’ provision in their power purchase agreements (PPAs), allowing them to raise tariffs. But distribution companies are likely to face challenges in passing the higher cost to consumers.

    “Although existing projects will have a cushion of change in law and force majeure provisions of the PPA to mitigate risks, those claims will not be uncontested, considering the stakes involved,” said Aditya K Singh, an associate partner at Link Legal.



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