Optimising Land Costs Crucial to Reduce Solar Energy Project Cost

Renewable energy developers in India are placing significant emphasis on the
optimisation of land costs as a pivotal strategy for reducing overall expenses
associated with solar energy projects. While land costs constitute a relatively small
portion of the total capital expenditure (capex) required for establishing solar
energy initiatives, experts in the renewable energy industry assert that cost
optimisation in this aspect can exert a substantial influence on the overall
economics of solar projects.

Efficiency in procurement or lease rentals is a primary driver in cost optimisation,
but equal importance is attributed to site selection and space utilisation. In India,
land cost optimisation in solar projects encompasses a multifaceted approach,
which includes meticulous site selection, efficient land utilisation, strategic
planning, etc.

By addressing these critical aspects, developers can effectively curtail land-related
expenses, rendering solar energy projects more sustainable in the Indian market.
However, this approach necessitates a comprehensive assessment of land-related
factors, collaboration with local authorities, and the formulation of various
strategies to minimise land costs while ensuring project efficiency and compliance
with regulations.

For solar energy, the most significant costs are attributed to land and panels. To
make solar power more cost-effective, the focus is currently on optimising land
costs.

Land acquisition, historically beset by challenges, including land records, occupier
status, compensation disputes, environmental clearances and state-specific cost
variations, continues to affect major development projects in the country. Delayed
land tie-ups can result in increased interest during construction (IDC) costs and
liquidated damages (LDs), significantly impacting project economics.