Great Indian Bustard and the Renewable Energy Sector – How to Save Both

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Uncertainty hangs over the future of renewable energy projects in Rajasthan following the Supreme Court order that says the region’s power lines must be moved underground as electrocution was one reasons given for the death of the endangered great Indian bustard (GIB). species of a large bird.

Order

According to the lead petitioner, in this case the Wildlife Institute of India, the Indian great bustard has disappeared from 90% of its habitat, with the exception of parts of Rajasthan and Gujarat which need to be protected. Every year, more than 100,000 birds die from a collision with power lines, and unless this is verified, the extinction of GIB is certain. So moving power lines underground and placing bird deflectors up there are suggested actions. But the soaring costs of laying power lines underground are exorbitant and bogged down by a variety of other issues, including the right of way (permission for an individual to enter private property and use it as a passage).

Cost of laying underground power lines

Speaking to Mercom, an executive at a major renewable energy producer said the cost of developing projects would increase by 87%. “Previously, if the cost of laying a 20 km line was 1.6 billion yen (about $ 21.45 million), it would now reach 3 billion yen (about $ 40.2 million). We need to bring overhead power lines underground. And that has a huge impact on us, ”he added.

The developers estimate the total cost of moving the existing overhead line to underground cables at 220 billion yen (~ 2.95 billion), requiring a 10-15% tariff hike if they are to bear all of that. cost.

“If the distribution companies (DISCOM) agree to be part of these projects, they will also be forced to increase the tariff. According to a calculation on the back of the envelope, the price for the consumer will increase by a minimum of 0.80 ((~ $ 0.011). We have to see whether or not consumers accept such a large price increase, “he said. one of the developers.

The Supreme Court order also mentions that “if costs are incurred, it would also be permissible to pass part of these costs on to the end consumer, subject to the approval of the competent regulatory authority”.

Another executive from a large developer said, “It’s not just the extra cost; the grip is a bigger problem. Private landowners won’t let you dig the earth and lay power lines. Previously it was just the footprint of the tower, but now we have to wait for their approval to dig through the land, which will further delay the commissioning of the project.

One of the main problems that power producers fear they will face is the obstacle to acquiring land for laying underground lines. “We don’t know how the villagers will react if we choose to acquire land for the laying of underground lines. Previously, we saw that the projects encountered problems with land acquisition because the villagers were not convinced. Plus, compensation packages come into play and the cost of projects goes haywire, ”one developer said.

Industry executives pointed out that these projects cover a long time scale, many set up years ago for ongoing projects. Such an exercise would involve enormous financial resources, which would be borne mainly by the project developers.

Suggestions are also made to mobilize financial resources for this huge exercise. One option is to tap into corporate social responsibility funds and the compensatory reforestation fund available from central and state authorities. Rajasthan has already established a management and planning authority for the Compensatory Reforestation Fund in 2009, which enables the fund to improve wildlife habitat, as mentioned in the court order.

Feasibility of underground power cables

The transmission companies that responded to the order said it was not technically possible to lay high-voltage lines underground. This is due to two reasons: the high cost, the high downtime to repair faulty cables, the unavailability of cables at the 765 kV level and the increase in the number of joints with the length of the stroke. There are cases where 220 kV lines are laid underground for the safety of flamingos in the Khadir area of ​​Kutch. But it depends on the terrain, area, distance and must be estimated on a case-by-case basis.

The region has many electrical installations, including renewable energy sources such as wind turbines and solar projects. Others are expected to arrive in the years to come.

It is noted in the Supreme Court order that it would not be possible to lay electric cables underground in some areas, and already existing cables cannot be moved in some places either. In such places, it is recommended to install bird deflectors on existing power lines; Whenever technically possible, new power lines near bird habitats can be buried.

A committee appointed by the Supreme Court will decide on the feasibility. The Supreme Court ordered that the conversion to underground power lines be completed within one year from the date of the order, and until then, diverters are expected to be suspended from existing power lines.

Contractual obligations

“We know that it is necessary to preserve natural flora and fauna, but there is also another aspect to this. And this falls within the retrospective application of this judgment since several existing projects were established a long time ago by means of a call for tenders. The question that needs to be resolved is whether these environmental considerations were part of the bidding conditions, ”said an industry executive.

“The increased project development costs due to this problem will fall under the ‘change of law’ clause, but it’s a long process. Developers are still struggling to get the Goods and Services Tax (GST) and guarantee repayment of duties for more than two years. Typically, developers need to invest in 20 to 25 km 220 kV lines from the project site to the substation. Previously, it would cost 10 million yen ($ 140,000) / km when it came to overhead power lines. Now, if we have to build power lines underground, it will cost us 40 million yen ($ 540,000) / km, ”commented another developer.

Offering a legal perspective, Aditya K. Singh, Associate Partner, Link Legal Services, said: “It is relevant to note that the bench’s observation in the Great Indian Outard case appears to be at odds with the views adopted by the Supreme Court in Nabha Power. , Shivshakti Sugar Mills where the Supreme Court specifically observed that the economic impact of the judgment should be taken into account. In this case, the Supreme Court, without dwelling on the relevant clauses, ordered the parties concerned to take shelter from the contract. These contractual benefits may not be available in all cases. I hope the Supreme Court will take a liberal view, as it has taken over the payment of dues on adjusted gross telecommunications revenues. “

Priority and potential habitats

The Supreme Court also ordered overhead power lines in priority and potential bird habitats to have bird deflectors or convert them to underground power lines depending on feasibility. Rajasthan has 4,000 km2 of priority habitat and 19,728 km2 of identified potential habitat for the Great Indian Bustard in Thar, covering Jaisalmer, Jodhpur and small parts of Bikaner and Barmer districts. This area also has very high potential for solar and wind power generation, and many developers have already acquired land for projects in these areas. Of the 37 GW of stations planned in Rajasthan, 30 GW are likely to fall within the settlement area.

A majority of the evacuation infrastructure is linked to the Interstate Transmission System (ISTS) and located in Rajasthan, scheduled for 2022-2023, and there could be serious implications for solar projects developed in Rajasthan due to this court order.

The developers hope the Supreme Court will reconsider the order to consider only the priority area for underground power lines for now. The area of ​​potential habitat is much larger, and it could be disastrous if this is also mandatory with underground power lines.

Lenders with whom Mercom spoke hope that only a few projects could fall under the priority area of ​​housing. The Supreme Court order said that if it is not financially viable to run power lines underground, they can install bird deflectors which shouldn’t be expensive. In addition, developers have the option of requesting a refund under the “change of law” clause. But there are also reflections on how to take this risk into account in future projects to be funded.

The next step

The developers have now let the Department of New and Renewable Energy (MNRE) move the case forward in the Apex court and hope the court will reconsider its order.

“More clarity is needed, and we hope the government will take positive steps to address the issue,” one developer said.

Commenting on whether the order is final or would be reconsidered, Aditya K. Singh, associate partner, Link Legal Services, said: “In the recent past, we have seen that the Supreme Court has allowed review motions filed by the government as in the Sabarimala case, Subhash Kashinath Mahajan case, Rajesh Sharma case, among others. Also in this case, if the government can address both issues – the lifespan of GIB and the growth of renewable energy assets, the Supreme Court may consider it appropriate to vary its orders. “

In any bidding, especially for renewable energy projects in the country, there is tremendous pressure on producers to keep tariffs as low as possible. The question asked by the developers is that if these environmental standards were not part of the terms of the original offering, then is it fair to put the additional financial burden on the developers at a later stage.

“There is a strong case to be made that the solar and wind projects involved are clean and environmentally friendly sources of energy that are contributing to serious air pollution problems in India. Every effort should be made to find practical solutions to this problem without financially burdening the very projects that do so much good for the environment, ”said Raj Prabhu, CEO of Mercom Capital Group.



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