The Ministry of Railways' plan to promote renewable energy is going off track as the developers are giving its tenders a miss every time.
And at the heart of the problem is land which must be allocated for such projects that aim to meet the Railways’ own energy consumption requirements. And land, claim those in the know, is a very contentious issue for the Indian Railways.
Industry sources told Moneycontrol that developers are finding the model adopted by Railway Energy Management Company (REMC) unviable since the tiny land parcels identified by the Indian Railways are located at distant locations and often difficult to access for such solar projects.
The estimated generation cost per unit of solar power through REMC is estimated in excess of Rs 4 as against Rs 3 as discovered in the multiple bids by Solar Energy Corporation of India that is promoted by the Ministry of New & Renewable Energy.
Recently, REMC extended the deadline for bid submission of the tender for 400 MW of solar projects, yet again, from December 17 to January 1, 2021.
Moneycontrol has reviewed the corrigendum issued by REMC. With this second extension in December itself, REMC has extended the deadline for at least six times since June 16, 2020 when the tender was floated.
This is not good news for the Indian Railways, which plans to develop 20 GW of solar projects in its vacant lands to help meet projected consumption requirements of over 33 billion units (BU) by 2030. The Indian government wants the Railways to be 100 percent self-sustainable for all its power needs.
In a meeting in July this year, top Railways officials told leading solar developers that the idea was to set up solar projects along railway tracks, ways to achieve the 20 GW renewable energy target. By doing so, Indian Railways would become a net-zero carbon emitter by 2030, and potential challenges they might face in the large-scale deployment of these solar projects.
Railways officials said the idea of utilising lands along railway tracks was also to prevent encroachment, enhance speed and safety of trains, and reduce infrastructure costs due to direct injection of solar power into the traction network.
A pilot project of 1.7 MW with direct connectivity to a 25 kV traction system is in operation in Bina, Madhya Pradesh. Another 3 MW solar project has been commissioned at Modern Coach Factory (MCF), Raebareli, Uttar Pradesh.
But developers say the project is not economical. Hence, not many are showing any interest.
The situation with this tender and other tenders floated in April and June, 2020 for 1,600 MW and 1000 MW respectively is not different. Both of these tenders were reissued in September and witnessing repeated extensions on account of lack of enthusiasm from the developers.
For the record, the bid submission deadline for 1600 MW of projects was extended thrice in the month of November and is yet to find takers for the capacity.
“The land parcels offered by Indian Railways are scattered and none of them are large enough to accommodate more than 20 MW of installations at a single location. Many of these parcels are covered with old trees and even encroached by underprivileged people whom the developer will have to deal with,” said a top developer requesting anonymity.
“During the consultations by REMC, developers have advised the officials to procure solar power from SECI that already has a bank of 16,000 MW. It is not advisable for the two government entities to take different routes for the same purpose when the cost efficiency has been clearly demonstrated by the SECI,” said the developer.
The developer further said the model adopted by the Ministry of Railways will not be cost effective and it should be - ideally - tied up with SECI instead of duplicating the efforts.
Ashok Khurana, director general, Association of Power Producers (APP) said it was not important that the Railways offer land close to the track. “Power can be transmitted anywhere but the main issue here is the land. If the land is in small parcels and if there are people occupying it, then it will be a problem. The economics of business will not work,” Khurana told Moneycontrol.
One of India’s top power experts, Kameswara Rao, told MoneyControl that the Railways will be better off if they combine all components and then offer it to the developers. “Land is just one of the issues in this project. To make it successful, all project components like land, maintenance, transmission can be clubbed together because producing power is not the core business of the Railways. So they would be better off if they can make the bid attractive for the developers.”
Repeated calls to the spokesperson of Indian Railways went unanswered.
SECI is spearheading Indian government’s mission to commission 100 GW of solar power generation capacity by 2022.
Incorporated in 2013, REMC is a joint venture of Indian Railways & RITES Limited to tap the business potential in the energy sector including green energy and power trading.
REMC is mandated with developing 3,000 MW of solar projects on vacant land parcels of Indian Railways to procure 20 percent of its electricity through renewable resources. Its 2,600 MW of capacity will be built, owned and operated by the private developers while 400 MW will be commissioned and maintained by the successful EPC contractor under the ownership of REMC.
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