Andhra Government Summons Wind Power Developers for Retrospective Tariff Negotiation

Continuing with its decision to renegotiate the Power Purchase Agreements (PPAs) for wind and solar power projects signed during the former Chief Minister Chandrababu Naidu’s tenure, the present government of Andhra Pradesh has now issued a notice calling the wind power developers for a meeting on July 15, 2019.

In a notice issued by its Chief General Manager, the Andhra Pradesh State Power Development Corporation Limited (APSPDCL), has mentioned that a revisit will be required for all the long-term PPAs signed by the wind power developers after 2012 on the ground of higher tariffs. The notice has stated that the recently constituted High-Level Negotiation Committee headed by the state’s Finance Minister will conduct the meeting with the wind developers.

The APSPDCL notice also mentions that the tariff paid to the wind power generators for the supply of power to the DISCOMs and end consumers in the state has caused an unjustified burden and therefore the government has decided to revisit them.

While the tariffs of some of the projects may be higher as they were commissioned under the feed-in tariff regime (which is no longer in effect), the government is bound to honor those tariffs.



Revisiting of PPAs is not new in India. For instance, Gujarat had tried requesting the developers, although unsuccessfully, to reduce the tariffs of projects that pre-dated the National Solar Mission (NSM). Due to high tariffs, it had to cancel two auctions recently as well.

In the past, Uttar Pradesh had also requested developers to voluntarily reduce tariffs for large-scale utility solar projects back in 2017. Uttar Pradesh had received the response of only two bidders amounting to 90 MW, out of the 500 MW capacity auctioned, due to tariff issues. Even Jharkhand had forced developers to reduce the tariffs back in 2017, but this was before signing the PPA.

Andhra Pradesh is among the top five renewable energy generating states in India and as per NREDCAP data, it has 8.16 GW cumulative installations as on June 30, 2019.

Earlier, Mercom had reported on Andhra Pradesh Chief Minister Jaganmohan Reddy’s review meeting with the state’s energy department to deliberate on the state government’s decision to revisit the PPAs of the solar and wind power projects that were allotted during the previous government led by Chandrababu Naidu.

This decision by the state government came despite the Ministry of New and Renewable Energy (MNRE) expressing its serious concerns over the state’s impending decision to revisit the power purchase agreements it had signed with solar and wind developers during the tenure of the previous government.

However, the Jaganmohan Reddy-led Andhra government did not pay heed to the MNRE’s letter of caution, and the chief minister recently announced forming a High-Level Negotiation Committee to deliberate and bring down the costs in all the high-priced PPAs for wind and solar power projects signed during the term of the previous Chandrababu Naidu-led government.

 

Image credit: By Diliff – Own work, CC BY-SA 3.0 via Wikimedia