Amendments to Solar, Wind, and Hybrid Policies in Andhra Pradesh

The Andhra Pradesh Energy Department has clarified that the amendments made to policies on the wind, solar, and wind-solar hybrid projects will apply to projects commissioned after November 18, 2019.

The Andhra Government had formulated renewable energy policies to promote widespread renewable energy by providing incentives to meet the twin objectives of energy security and clean energy.

Andhra Pradesh announced its wind-solar hybrid policy In January 2019 and also a solar policy targeted at a solar capacity addition of 5,000 MW in the next five years in the state.

However, in November 2019, certain modifications were made to the policies considering the need to improve the financial health of Andhra Pradesh distribution companies (DISCOMS).

Andhra Pradesh had provided a state-backed guarantee for DISCOMs to secure a ₹66 billion (~$873.4 million) loan from the Power Finance Corporation Limited (PFC) and Rural Electrification Corporation Limited (REC). As of March 31, 2020, power dues payable by Andhra Pradesh DISCOMs stood at ₹66.73 billion (~$883.13 million).

The government issued a notification amending the state’s policy for wind, solar, and wind-solar hybrid projects, withdrawing some vital incentives from the renewable generators.

Many provisions in these policies that deal with transmission charges, energy banking, and tariff determination are either modified or canceled.

For wind-solar hybrid projects, the transmission and distribution charges were exempted up to 50% of the applicable charges for wheeling of power within the state according to the 2018 policy. This has now been amended.

Banking of 100% energy, which was allowed throughout the year based on the feasibility and prior approval for solar, wind, and hybrid projects earlier, is deleted.

The policy also states that the tariffs for renewable energy projects or any other variable renewable energy project will not exceed “the difference between pooled variable cost and balancing cost.” The state regulator will be the authority for setting the pooled variable cost and balancing cost every year.

The amendment also states that the procurement of government land for the development of solar, wind, and hybrid projects can only be done on a lease-hold basis.