Rajasthan has long been the hub of India’s renewable energy push, with one of the highest solar potentials in the country. Due to large areas of arid land and high solar irradiation, the state had drawn in substantial investments from top solar firms in India, including the renewable energy major Avaada. Nevertheless, recent amendments to land laws are likely to make a big difference for solar energy developers by 2025.
New Land Laws and Their Motivation
At the beginning of 2024, the state government of Rajasthan announced amendments in its land allocation policies with an aim to improve land use, enhance transparency, and meet local environmental needs. The new laws mandate solar companies to secure numerous clearances, limit leasing on specific categories of government land, and apply stronger conditions for transferring agricultural land to solar use.
The purpose of making these changes is to encourage more inclusive and sustainable development by:
- Ensuring the non-displacement of agricultural populations in large solar parks
- Conserve ecologically sensitive areas
- Augment revenue for the state through land use charges
For solar project developers, it has added new challenges to implementing projects.
Impact on Project Costs and Timelines
Based on recent reports, such changes are set to raise land acquisition costs and project timelines. Developers now have to contend with extra administrative levels, such as local village permits and impact assessments.
For heavyweights such as Avaada, which recently made a whopping ₹1 lakh crore investment in Rajasthan during the Rising Rajasthan Summit 2024, this implies reassessing project viability and execution timelines. Avaada’s large-scale investments, such as solar, green hydrogen, and manufacturing facilities, all depend on efficient land acquisition.
While Avaada is sticking to its renewable thrust in the state, the company and other solar players in India will need to include higher compliance expenses and longer lead times for land clearances.For insights into the latest developments and future outlook of solar panel production, check out the blog on ‘PV Manufacturing Trends in India’.
Small Developers Could Have More Challenges
While huge companies will be able to absorb the added expense through financial strength and long-term vision, small developers might not be able to cope. The new legislation complicates matters for small and medium-sized operators in obtaining contiguous pieces of land required for optimal solar farm design.
This can precipitate a consolidation pattern in the market, wherein bigger companies purchase stalled or abandoned projects from smaller players that perceive the regulatory regime as too complex to handle.
Opportunities in Agri-Solar and Distributed Projects
On the positive side, policy shifts might speed up interest in agri-solar and distributed solar models. In schemes such as PM-KUSUM, where solar panels are mounted on agricultural land without interfering with crop production, developers can avoid part of the new land norms.
Rajasthan has already announced attractive tariffs for solar projects under KUSUM, and the new policies might make these models even more attractive. Diversified portfolio companies like Avaada are well placed to consider such alternatives that align land use with power generation.
Learn more about the Top 10 States in India for Solar Installation Capacity
Industry Response and Future Outlook
Though short-term disruption, industry players have been cautiously optimistic. The long-term strategy behind the land law reforms fits into India’s vision of having 500 GW of non-fossil fuel capacity by 2030. Sustainable and responsible development will be paramount as solar growth continues on Rajasthan’s semi-arid landscape.
Avaada, a pioneer solar company in India, has affirmed its commitment to innovation and sustainability. Avaada plans to invest in green ammonia as well as solar and hydrogen production and is most likely going to adjust quickly to the changing regulatory environment.
Conclusion
The Rajasthan new land laws are a transition towards responsible development, even though they may involve short-term growing pains for the solar industry. Though they create challenges, they also offer opportunities for innovation in land and technology use. By 2025, key players such as Avaada and other Indian solar players will have to evolve strategies, adopt distributed models, and make investments in community-inclusive approaches to survive.
