The Andhra Pradesh government has announced that it is planning to develop 10 GW of solar power projects as a permanent solution to supply free power to farmers in the state.

According to Mercom’s India Solar Project Tracker, Andhra Pradesh accounts for 3.4 GW of large-scale solar projects in operations, and approximately 1.6 GW of projects are under the development pipeline as of December 2019.

Currently, the government incurs more than ₹100 billion (~$1.39 billion) to meet the agriculture subsidy, lift irrigation power charges, and aquaculture subsidy every year. To meet the subsidies sustainably, the government felt that there is a need for evolving an alternative mechanism to provide quality power and a nine-hour daytime free power supply to farmers.

After considering all the factors, the state government has decided to form Andhra Pradesh Green Energy Corporation Limited (APGECL) for the installation of 10 GW of solar projects in the state to ensure nine hours of daytime free power supply to the agriculture sector on a sustainable basis.

As per the government’s permission, the APGECL will be a 100% subsidiary of APGENCO. Until the time APGECL generates its income, the entire expenditure for running the company will be borne by the Andhra Pradesh Power Generation Company Limited (APGENCO). The amount will be reimbursed to APGENCO, once APGECL begins to generate its income.

According to the notice issued by the state, APGENCO will lease out the required premises to house the new company, and APGENCO will pay the required lease rental until the time APGECL is in a position to pay the same. APGENCO will provide all the technical and professional staff, including engineers, and will continue to pay the salaries. The arrangement will continue till APGECL can do it on its own.

As per the document, the authorized share capital of the company is ₹1.5 million (~$20,927.5) divided into 1,50,000 equity shares of ₹10 (~$0.14) each. The paid-up capital of the company is ₹10,00,060 (~$13,952.5), and the amount will be paid to the company by APGENCO after the incorporation of the company on behalf of APGENCO or nominees of the government.

Recently, the Andhra Pradesh high court at Amaravati asked the Power System Operation Limited (POSOCO) to look into the reasons behind the curtailment of renewable power in the state. The petitioners had gone to court against Andhra Pradesh DISCOMs’ inability to pay the dues and resorting to the curtailment of power from the projects.

In July last year, the Government of Andhra Pradesh had constituted a high-level negotiation committee to deliberate and bring down the costs in all the high-priced Power Purchase Agreements for wind and solar power projects signed during the term of the previous Chandrababu Naidu-led government, alleging corruption.

It is unclear how APGENCO will pay for free solar while it is currently curtailing wind and solar power in the state.

Image credit: Adani