The Government of Andhra Pradesh has announced the Andhra Pradesh Integrated Clean Energy (ICE) Policy 2024 to transform the state into a global clean energy hub. The state aims to add over 160 GW of renewable energy capacity and attracting investments worth approximately ₹10 trillion (~$118.95 billion).

The policy remains applicable for five years from the date of issuance or until a new policy is introduced.

The capacity additions have been planned for Andhra Pradesh Discoms’ procurement, export of power to other states, green hydrogen production and its derivatives, and also to meet commercial and industrial consumption under the open access route. The following table summarizes the expected capacity additions under each of the renewable sources:

 

Project Timelines

Projects achieving financial closure during the policy’s operative period will also be granted additional time for implementation based on the technology and project type.

Incentives for Clean Energy Projects

The ICE Policy offers a range of incentives to attract investment and promote clean energy development across the state.

Developers can lease government or private land for a maximum of 30 years (extendable to 33 years for pumped storages projects (PSP) and Mini Hydro Projects). Land allotment will be per the Andhra Pradesh Land Allotment Policy, 2012.

Deemed non-agricultural status will be granted to land used for clean energy projects, and land conversion fees will be exempted.

Lease rates for land are set at:

• ₹31,000 (~$368)/acre/year for most clean energy projects, with a 5% escalation every two years
• ₹15,000 (~$178) /acre/year for biofuels projects.
• ₹100,000 (~$1,189) /acre/year for Green Hydrogen Hubs at ports.

Transmission and Distribution Charges

Wheeling charges will be waived if the injection and withdrawal of power occur at the same voltage level.

Charges for consumers using lower voltage or across different DISCOM boundaries will be calculated block-wise.

The policy exempts cross-subsidy surcharge for clean energy projects fulfilling captive generation criteria.

Electricity Duty and Open Access

Electricity duty will be paid for clean energy projects as determined by the Government of Andhra Pradesh. Renewable energy manufacturing projects, however, will enjoy ten years of electricity duty reimbursement, irrespective of procurement through DISCOMs or third-party sales.

Open access will be available to consumers with a contracted demand or load of 100 kW or more.

Energy Banking and Grid Management

Banking capacity is capped at 5% of peak grid demand for FY 2024-25, with additional capacity of 5% introduced annually. Different time slots (peak 5 AM-9 AM & 7 PM-11 PM, normal 11 PM-5 AM & 5 PM-7 PM, and off-peak 9 AM-5 PM) are defined for energy injections and withdrawals, optimizing grid management.

Clean Energy Manufacturing

The policy includes provisions for developing Renewable Energy Manufacturing Zones (REMZ) to further incentivize the manufacturing sector. It encourages investments in producing clean energy technologies like solar PV, wind turbines, batteries, and electrolyzers.

Incentives for manufacturing projects include:

Capital Subsidies: Up to 25% of fixed capital investment for solar, wind, and electrolyzer manufacturing and 20% for battery manufacturing.

SGST Reimbursement: 100% reimbursement for all products (except electrolyzers, which receive 50%) for five years.

The New & Renewable Energy Development Corporation of Andhra Pradesh (NREDCAP) will establish a single-window clearance portal to facilitate time-bound statutory clearances for all clean energy projects under the ICE Policy.

Solar and Wind Projects

A capital subsidy will cover 25% of the fixed capital investment for solar manufacturing plants, including captive generating projects and mines, paid over five years from the project’s commercial operation date.

NREDCAP will assist in procuring land at the actual cost for the manufacturing plant and will preferentially allot captive resources for PLI projects.

Land used for solar/ wind manufacturing projects will be granted deemed non-agricultural status, with one-time land conversion applications required and all fees for eligible projects waived.

Open Access Charges, including transmission, distribution/wheeling charges, and cross-subsidy surcharge, will be exempt for ten years, with energy banking as per GEOA Regulations 2024.

The government will reimburse 100% of net SGST on product sales for five years.

For qualified manufacturing projects, a subsidy of ₹1 (~$0.012)/unit (kVAh) on electricity tariffs will be provided for ten years from COD.

Electricity duty will be reimbursed for ten years, after which the duty will be payable at prevailing rates.

Solar manufacturing units with a vertically integrated value chain (from Mine to Module) and allocated PLI will receive priority for energy banking capacity allotment for 25 years from the COD of the captive generating project.

The distribution licensee will provide an off-take guarantee of 10% of the total annual solar/ wind capacity (MW) procured by DISCOM to the solar/ wind turbine manufacturers at the lowest tariff discovered.

Green Hydrogen

Green Hydrogen projects using electrolyzers are eligible for a 25% capital subsidy on the plant and equipment costs, specifically for the electrolyzer stack. This subsidy is capped at 10 million (~$118,963) per MW or 1,400 tons per annum (TPA) and will be disbursed over five years post-commissioning. To qualify, plants must have a minimum capacity of 150 KTPA, and the subsidy is available for the first ten plants or up to 1.5 MTPA capacity, whichever comes first.

For integrated facilities producing green hydrogen, green ammonia, and green methanol, a 25% capital subsidy is offered on plant and equipment costs. The subsidy is capped at:

• ₹18.5 million (~$220,066) per KTPA production unit for Green Ammonia
• ₹22.5 million (~$267,648) per KTPA production unit for Green Methanol

This subsidy will also be paid over five years after the plant is commissioned.

In addition to Central Financial Assistance, the State Government will provide up to 25% of infrastructure costs, capped at ₹100 million (~$1,18 million), for power, water, and roads required to develop Green Hydrogen hubs. This support is limited to one hub per port, with government land parcels in port vicinities leased at ₹100,000 (~$1,189 ) per acre per year.

The state government will reimburse 100% of the net SGST on the sale of green hydrogen and its derivatives within the state for five years post-commissioning.

Developers of green hydrogen projects will benefit from a 50% exemption on intra-state transmission charges for power procured from renewable energy sources within the state. The exemption lasts five years and is capped at ₹1.5 million (~$17,844) per MW of electrolyzer capacity annually. The developer must still pay applicable transmission losses.

The cross-subsidy surcharge, applicable to energy-intensive industries, will be exempt for five years of energy drawn from renewable energy plants within the state for green hydrogen production. Additionally, there will be a 100% exemption on the additional surcharge for the same duration.

Electricity duty will be fully reimbursed for power consumed by green hydrogen and derivative projects using renewable energy for five years.

Electrolyzer Manufacturing

Electrolyzer manufacturing units will receive a 25% capital subsidy on fixed capital investment, disbursed over five years from commissioning. The minimum plant size must be 500 MW of electrolyzers per annum, and the subsidy will apply to the first five plants or up to 3,000 MW capacity.

Like green hydrogen projects, electrolyzer manufacturing facilities will automatically receive non-agricultural status with exempted land conversion fees. Additionally, developers will receive a 50% reimbursement of net SGST for five years.

Electricity duty for electrolyzer manufacturing will be fully reimbursed for five years, and developers will receive a power tariff reimbursement of ₹1 (~$0.012)for the same period.

Developers will receive a 25% exemption on industrial water charges for ten years, with water delivered directly to the manufacturing facility.

In May, Andhra Pradesh adopted the Green Energy Open Access, Charges, and Banking Regulations, 2024.

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