Andhra Pradesh has come up with a new solar policy with the aim to promote widespread usage of solar power and targets a minimum total solar power capacity addition of 5,000 MW in the next five years in the state.

This policy will remain applicable for a period of five years or until a new policy is issued. Solar power projects (SPP) that are commissioned during the operative period will be eligible for the incentives declared under this policy for a period of 10 years from the date of commissioning.

Policy Highlights

• Distribution companies (DISCOMs) will procure around 2,000 MW of solar power capacity in a phased manner within the next five years depending on the requirement in the state.
• The DISCOMs will enter long-term power purchase agreement (PPA) of 25 years with developers who are selected based on a competitive procurement process as per the tariff based competitive bidding guidelines notified by the Ministry of Power.
• Procurement of power from solar projects having capacity less than 5 MW will be paid at a feed in tariff (FiT) rate determined by Andhra Pradesh Electricity Regulatory Commission (APERC).
• Government will encourage solar power producers to set up projects for captive use within the state or for third-party sale within and outside Andhra Pradesh. These projects will also qualify for Renewable Energy Certificates (REC) mechanism.
• Government expect to initially develop 4,000 MW capacity of solar parks.
• Government will promote solar rooftop systems on public buildings, domestic, commercial and industrial establishments on gross and or net meter basis. The consumers are free to choose either net or gross meter option for the sale of power to DISCOMs. The applicable tariff for either of the cases will be equal to the average pooled power purchase cost (APPC) determined by the APERC.
• For rooftop solar systems, projects of capacity up to 1,000 kW at a single location will be permitted.
• 50,000 solar powered pump sets are targeted to be operational in the state in the next five years without any additional financial burden on the farmers.
• Transmission and distribution charges will be exempted only for connectivity to the nearest Central Transmission Utility (CTU) via State Transmission Utility (STU) network for inter-state wheeling of power subject to the consent of APERC.
• Banking of 100 percent of energy will be permitted during all 12 months of the year, based on the feasibility and prior approval of the DISCOMs. Banking charges will be adjusted at the rate of 5 percent of the energy delivered at the point of transmission. The banking year will be from April to March.
• Withdrawal from banked energy will not be permitted during five-month period from April 1 to June 30 and February 1 to March 31 of each financial year.
• Unutilized banked energy will be considered as deemed purchase by DISCOMs at 50 percent of the APPC. Payment for the deemed purchase of unutilized banked energy will be capped to 10 percent of the total banked energy during the applicable year.
• Intra-state open access clearance for the whole tenure of the project or 25 years whichever is earlier will be granted as per the APERC regulations. In absence of any response from the nodal agency to the generator within 21 days, such application will be deemed open access.
• Generation of electricity from solar projects will be treated as eligible industry under the programs administered by the industries department, and incentives available to industrial units under such programs will be available to the solar power producers.
• Must-run status has been accorded to solar.

Andhra Pradesh has a large share of power consumption going to its agricultural sector, constituting around 24 percent of the total energy consumption of the state. In such a scenario, solar power can  prove to be an excellent fit to shift the agriculture load and meet the power demand during the day time.

According to Mercom’s India Solar Project Tracker, Andhra Pradesh has installed solar PV capacity of ~2.75 GW and a project pipeline of 1.9 GW.