Rajasthan cancels over 100 Kusum-A solar projects

Rajasthan has cancelled over 100 Kusum-A solar projects after developers failed to sign power purchase agreements (PPAs) within the stipulated timelines. Many of these bidders had initially offered very low tariffs to win contracts, but later withdrew when the projects became financially unviable due to high implementation costs and regulatory uncertainties.

The impact has been uneven across districts. Jaipur alone accounted for nearly 70 project cancellations, while Jodhpur saw around 42 projects scrapped. Under the Kusum-A scheme, farmers are allowed to host solar plants of up to 2 megawatts (MW) on their land. They can either sell the electricity generated to distribution companies (discoms) at pre-determined tariffs or lease their land to developers for project execution. The large number of project cancellations highlights the challenges associated with aggressive low-bid pricing in India’s renewable energy sector, particularly in schemes aimed at integrating solar capacity on agricultural land.

The projects that were defaulted are now set to be re-auctioned. Authorities hope that the revised auctions, which may include adjusted tariffs or improved risk-sharing mechanisms, will attract credible developers and ensure smoother implementation. This presents an opportunity for new entrants and existing players to participate under conditions that better reflect the financial realities of small-scale solar projects.

In a separate development, Rajasthan Renewable Energy Corporation Ltd (RRECL) has put a temporary hold on rooftop solar tenders for government buildings. The suspension comes after reports of fraudulent bank guarantees and unsatisfactory outcomes under the hybrid annuity model used in earlier tenders. To address these challenges, RRECL is preparing a revised framework for rooftop solar projects. The new approach is expected to strengthen transparency, improve execution, and reduce risks for developers and government agencies alike.