Contracts Worth $10 Billion to be Awarded for 3,000-Megawatt Gujarat Solar Park Backed by Clinton Foundation

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Climate Change Initiative (CCI), promoted by the William J. Clinton Foundation, is setting up solar power plants with a total installed capacity of 3,000 megawatts (MW) in the state of Gujarat, for which contracts worth $10 billion are expected to be awarded by January 2010. The foundation, set up by former U.S. President Bill Clinton, works on global projects in the areas of health care, climate change, education, and sustainable economic development.

Four potential locations in the Banaskantha and Kutch districts along the India-Pakistan border have been identified for these power projects. About 5,000 hectares of land will be required to set up the power-generating facilities. Ira Magaziner, Chairman of CCI, recently signed a memorandum of understanding with representatives of the Gujarat state energy department. The feasibility study is expected to be completed in 2010, with the power project commencing operations by 2012.

Magaziner has indicated that the choice of Gujarat for this project was based on its location, availability of year-round sunshine, and regulatory policies. The project is estimated to cost about $8 billion to $10 billion. CCI has initiated discussions with 12 international companies to raise funds for the solar projects. Talks also are in progress with the Asian Development Bank (ADB) (Manila, Philippines) and other funding agencies to raise funds for this project at lower interest rates. This is expected to reduce the cost per kilowatt-hour (kWh) of power generation. CCI, which has planned to develop about 20,000 MW of installed solar power capacity, is proposing to build such solar power projects in South Africa, California and Australia. The solar park in Gujarat will be the first among these projects to be developed and commissioned.

In January, during the Vibrant Gujarat Summit, the state government unveiled its solar energy policy to harness the abundant solar potential. The government also approved 34 power projects, with a total installed capacity of 716 MW. These projects will consist of 365 MW solar photovoltaic power plants. The remainder will be solar thermal projects. Several domestic and international energy companies will set up projects as part of this initiative. Some of the solar photovoltaic projects include:

• 15 MW plants, each by Azure Power Limited and AES Solar Energy (Arlington, Virginia)
• 25 MW projects, each by Dreisatz GmbH (Dresden, Germany) and Ashtonfield Gujarat Limited (Ahmedabad, Gujarat)
• 5 MW plants, each by JSW Energy Limited (Bellary, Karnataka) and Krishak Bharati Cooperative Limited (KRIBHCO) (Surat, Gujarat)
• A 35 MW plant by Lanco Solar Limited (Hyderabad, Andhra Pradesh)

AES Solar Energy is a joint venture between The AES Corporation (NYSE:AES) (Arlington) and Riverstone Holdings LLC (New York). The company has nine solar power projects in the Andalucía and Extremadura regions of Spain.

NTPC Limited (BSE:532555) (New Delhi) and Adani Urja Limited (Ahmedabad, Gujarat) will set up solar thermal power plants of 40 MW and 50 MW, respectively, while Electrotherm India Limited (BSE:526608) (Gandhinagar, Gujarat) and Abengoa SA (MCE:ABG) (Seville, Spain) will invest in 40 MW power projects each.

As part of the solar policy, the state government will provide assistance in land acquisition, development of infrastructure, and procedural clearances. The government is also offering a demand rebate of 50% on solar energy installations commencing operations before December 31, 2010. A 12-year power purchase guarantee has been provided at the rate of US 27 cents per kWh for power from photovoltaic plants and US 20 cents per kWh from solar thermal plants. The government also has guaranteed exemption from electricity duty for all solar-based power projects in the state.

Gujarat is focusing on developing the state into a renewable energy hub to meet the state's growing energy needs. Gujarat's power consumption is estimated to reach 14,000 MW by 2012.

Emerging economies, such as India and China, have revived efforts to develop renewable and sustainable energy sources to reduce greenhouse gas emissions. The move also will reduce reliance on traditional fossil fuel-based power plants. In July, China announced the "Golden Sun" initiative, which provides a 70% subsidy on the cost of solar power projects with a minimum capacity of 500 MW. The scheme is open until 2012. There is also a provision to provide a cash bonus of $2.90 per kWh for solar power installations to encourage usage. The Chinese government also has set out energy efficiency guidelines for projects: 14% for multi-crystalline photovoltaic cells plants, 16% for mono-crystalline photovoltaic projects, and 6% for amorphous silicon photovoltaic projects.

In a related development, First Solar Incorporated (NYSE:FSLR) (Tempe, Arizona) has announced plans to build a 2,000-MW solar power project in China. The facility, which will be constructed on 25 square miles of land in Inner Mongolia, is expected to be completed by 2013. Construction of the first phase of 30 MW will begin in June 2010, followed by the second and third phases by 2014. Construction of the fourth phase is expected to begin by 2019.

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