Overcoming Land Ceiling Roadblocks in Solar Power Generation

Overcoming Land Ceiling Roadblocks in Solar Power Generation

Developing and operating a successful solar energy project requires rigorous planning procedure to get various approvals. This takes into account the suitability of the site, any potential impact on the locality and relevant renewable energy targets; therefore, it is imperative to ease the provision of land purchase for renewable energy development.

Government of Karnataka (“GoK”) vide its Solar Policy dated 22.05.2014 in para 18 has showed its intent to amend the Karnataka Land reform Act, 1961 (“Act”) which is an encouraging step for renewable energy development. This initiative identifies the renewable energy potential in the state of Karnataka and provides other useful resources for developers, industry, state for using waste or un-irrigated land for renewable purpose. The said policy is a welcome step; however, it needs to be clarified on how the Government would come with these changes/amendments. Assuming that the LOI or PPA would be assigned in next few weeks, here are some immediate steps which the Government may do to implement its Solar Policy-:

1.    GoK can come with an immediate notification under Section 109 (1) (i) of the Act which states that the State Government may by notification can exempt any land from the provision of 79A & 79B to be used for industrial development. The relevant provisions under Section 109 are captioned as under:-

Section 109 - Certain lands to be exempt from certain provisions

(1) Subject to such rules as may be prescribed and the provisions of the Karnataka Town and Country Planning Act, 1961 (Karnataka Act 11 of 1963), the State Government may, by notification, exempt, any land in any area from the provisions of sections 63, 79A, 79B or 80 to be used for,--

(i) industrial development, the extent of which shall not exceed twenty units;

(ii) educational institutions recognised by the State or Central Government to be used for non-agricultural purpose the extent of which shall not exceed four units;

(iii) places of worship to be specified by Government by notification which are established or constructed by a recognised or registered body for non-agricultural purpose, the extent of which shall not exceed one unit;

(iv) a housing project, approved by the State Government the extent of which shall not exceed ten units;

(v) the purpose of horticulture including floriculture and agro based industries the extent of which shall not exceed twenty units:

[Provided that the Deputy Commissioner may also exercise the powers of the State Government under this sub-section, subject to the restrictions and in the manner specified therein, in respect of the land to be used for,-

(i) industrial development, the extent of which shall not exceed ten units;

(ii) educational institutions recognised by the State or Central Government to be used for non-agricultural purpose the extent of which shall not exceed two units;

(iii) places of worship to be specified by Government by notification which are established or constructed by a recognised or a registered body for non-agricultural purpose, the extent of which shall not exceed one fourth of a unit;

(iv) a housing project, approved by the State Government the extent of which shall not exceed ten units;

(v) the purpose of horticulture including floriculture and agro based industries the extent of which shall not exceed ten units.]

(1A) Notwithstanding anything contained in sub-section (1), the State Government may in public interest and for reasons to be recorded in writing,[by notification and subject to the provisions of the Karnataka Town and Country Planning Act, 1961 (Karnataka Act 11 of 1963) and such restrictions and conditions as may be specified by it, exempt any extent of land from the provisions of sections 63, 79A, 79B or 80] for any specific purpose.]

[ Provided that the Deputy Commissioner may subject to the restrictions and the manner specified in this sub-section exercise the power of the State Government to grant exemptions to an extent not exceeding half hectare of land.]

(2) Where any condition or restriction specified in the notification under sub-section (1), has been contravened, the [State Government or as the case may be, the Deputy Commissioner may] after holding an enquiry as [it or he deems fit], cancel the exemption granted under that sub-section and the land in respect of which such cancellation has been made, shall, as penalty be forfeited to and vest in the State Government free from all encumbrances. No amount is payable therefor'.]

2.    And subsequently amend section79B to remove restriction on companies who are engaged in the business of solar power and also bring more clarity in section 109 of the Act & section 95 of Karnataka Land Revenue Act, 1964, giving a Solar Power Developer full exemption to buy land for setting of Solar Power Project on a deemed NA basis;

Section 79B, Schedule I & Section 2 (A) (35 A)] is as under:

Section 79B - Prohibition of holding agricultural land by certain persons

(1) With effect on and from the date of commencement of the Amendment Act, except as otherwise provided in this Act,--

(a) no person other than a person cultivating land personally shall be entitled to hold land; and

(b) it shall not be lawful for,-

(i) an educational, religious or charitable institution or society or trust, other than an institution or society or trust referred to in sub-section (7) of section 63, capable of holding property;

(ii) a company;

(iii) an association or other body of individuals not being a joint family, whether incorporated or not; or

(iv) a co-operative society other than a co-operative farm, to hold any land.

(2) Every such institution, society, trust, company, association, body or co-operative society,--

(a) which holds lands on the date of commencement of the Amendment Act and which is disentitled to hold lands under sub-section (1), shall, within ninety days from the said date, furnish to the Tahsildar within whose jurisdiction the greater part of such land is situated a declaration containing the particulars of such land and such other particulars as may prescribed; and

(b) which acquires such land after the said date shall also furnish a similar declaration within the prescribed period.

(3) The Tahsildar shall, on receipt of the declaration under sub-section (2) and after such enquiry as may be prescribed, send a statement containing the prescribed particulars relating to such land to the Deputy Commissioner who shall, by notification, declare that such land shall vest in the State Government free from all encumbrances and take possession thereof in the prescribed manner.

(4) In respect of the land vesting in the State Government under this section an amount as specified in section 72 shall be paid.

Explanation.--For purposes of this section it shall be presumed that a land is held by an institution, trust, company, association or body where it is held by an individual on its behalf.

To ensure that a good and irrigated land is not diverted towards solar power projects, the exemption may be restricted to purchase of Class C & D land. To ensure the cost-effectiveness of large-scale projects, developers will want to seek out lands with low agricultural or mineral value, and research the value of the land and its potential and we also doubt a company of this nature would have limited time under the Power Purchase Agreement. Therefore, Innovative Land amendments and Policies would spark project developer interest in buying private property for solar farms, opening the door for governments and consumers to share in the benefits of the solar industry’s growth.