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India's small village of Pavagada Taluk historically relied on agriculture as it's mode of production, but as drought became more and more frequent, agricultural production became impossible. As a result, the village became impoverished and its residents have suffered. However, India's Prime Minister Narendra Modi has announced that one of the largest solar parks in the world will be built in the village, which will bring economic stability to the tiny town. Here is an excerpt: 

Land is key to building solar parks. But in a densely populated country like India, large swathes of land that can be used for this purpose have been tough to come by. But Balram, having grown up in a village, had a different perspective on this compared to other solar entrepreneurs. He knew that farmers are typically emotionally attached to their land. So, instead of land acquisition or transfer, Balram gave farmers the option of leasing out their land for 25-35 years. Given how farmers have suffered little due to no crop yield in recent years due to low rainfall, the land lease model, farmers could help them earn nearly $300 per acre/year and still have the land stay in their names. From impoverished farmers to wealthier ones, currently, more than 2,000 farmers are in the process of signing leases for around 10,000 acres of land.

Balram does not want to stop at just land lease payments to farmers. He is motivating local farmers to create a cooperative, which will provide basic health, education and other livelihood services to residents of Pavagada village. He also has plans to offer jobs to local villagers inside the solar park. He also plans to keep two percent of the cost of the solar park project towards the social development of Pavagada.
Solar parks follow a “plug and play” model for potential investors, by designating and developing one or more blocks of land as a concentrated zone for solar development. Individual solar plants will share common infrastructure like power evacuation and roads, reducing costs. The major interest in these concentrated hubs have been due to their ability to achieve economies of scale by developing shared infrastructure facilities for each business located in the zone. Moreover they reduce unforeseen risks for investors by acting as a single window clearance agency and providing certainty with respect to investment and relevant policy, regulatory and incentive frameworks.

With around 300 days of sunshine every year, India has among the best conditions in the world to harness solar energy. However, the steep up-front costs of solar projects, high borrowing costs and lack of access to long-term capital have stalled solar energy growth. Now, the government has set a target of 100 GW of solar by 2022, of which 20 GW is for solar parks.

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Written by
Huon Hoogesteger

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