Sops for new energy sector

The government has scrapped five per cent equity to farmers

In what can be seen as a major relief for private power producers, the government has scrapped the five per cent equity to be given to farmers.

The policy had earlier stated that a five per cent equity of gross energy generated had to be provided to take the land owner farmers as equity partners in the renewable energy projects. This was in addition to the compensation, re-settlement and rehabilitation offered to farmers.

The renewable energy policy was introduced to boost generation in the State through renewable energy sources. The target set by the policy was to increase production from  2,400 MW to 6,600 MW by 2014 with an investment of Rs 22,950 crore.

The provisions contained in the energy policy will now be applicable to projects sanctioned after the notification of the amendments in the gazette. Earlier, this was applicable to all the projects sanctioned prior and in the process of development.

Objections raised

The clause specifying the lease period for the land as 30 years, following which the project would be transferred to the government, had drawn several objections from power producers who had claimed that 30 years would not be sufficient to recover investment and register profits. This clause has now been diluted stating that after completion of 30 years, the project would be renewed every five years, subject to the conditions stipulated by the government.

The wind energy sector has been the biggest benefactor with the government removing the 50 MW cap on wind energy projects. Additional Chief Secretary (Energy) K Jairaj said that wind energy could not be restricted in scale as India had not yet matured as a market and the seasonality of the wind power did not make it very attractive. These changes were incorporated following several rounds of consultation with power producers, “If we wanted to achieve the targets we set for ourselves, then some of these clauses had to go,” he remarked.

Other amendments include the removal of Power Company of Karnataka Limited (PCKL) as the gobetween to assign power purchase agreements to ESCOMs and the setting of 126 MW target for production of energy through solar power.