Mamata Banerjee’s ‘no land acquisition’ policy has already impacted investment into West Bengal. Now, her policy to allocate State-held land through competitive bidding may prove to be a stumbling block in attracting investments in the Eastern region’s largest wind-farm project.

Leaving aside a pump storage project (which uses conventional electricity to generate hydro-power to ensure grid stability), more than 90 per cent of the State’s electricity needs are met through coal-based generation. The rest is mostly hydropower sourced from the Central sector.

The total contribution of renewables (excluding hydro) is limited to 25 MW (out of over 4,000 MW needed daily ) — that too, mostly from bio-mass sources. Wind farm capacity is a mere 2 MW in the Sunderbans.

Suzlon shows interest

To improve the renewable energy share, in 2009, the West Bengal Green Energy Development Corporation (WBGEDC) proposed a 40-50 MW facility on 1,400 acres in the backwaters of Bay of Bengal at Dadanpatra, approximately 150 km from Kolkata, in Purba Medinipur district.

Of the total area, approximately half is used by the State Fisheries Department. The rest is under the closed State undertaking, Bengal Salt Company.

WBGEDC felt that at least 40 odd wind-farms of 1.6 MW each may come up on the 700 acres available with Bengal Salt. The plant load factor (PLF) or capacity utilisation was estimated to be 16 per cent, lower than Tamil Nadu’s and Gujarat’s wind farms.

Responding to the proposal, Suzlon evinced interest in investing Rs 500 crore in the project in 2010. However, according to a former State official spearheading the initiative, the viability of the project was in question in view of the lower PLF vis-à-vis the then approved generation tariff of Rs 3.50 a unit.

Techno-economic prospects finally brightened in 2012 when the wind-power tariff was capped at Rs 5.70 a unit for 10 years. Available estimates suggest that this is enough to offer a 14-15 per cent internal rate of return to the prospective investor.

Land, a crucial issue

“The return is not lucrative. However, it may attract investors, provided land is offered at low cost,” said a renewable energy expert associated with the Union government.

And, that is against the policies of the Mamata Banerjee Government. She had accused the former Buddhadeb Bhattacharjee-Government of preferential treatment to Tata Motors, in offering land for the Nano facility in Singur.

“The issue is simple. West Bengal is in need to increase the renewable energy share to protect the environment. And, competitive bidding for land may fail to attract serious investors to run such a low-yielding project in the wind power sector,” said the expert.

pratim.bose@thehindu.co.in

(This article was published on April 7, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.