In response to a question raised in the Lok Sabha, Union Power Minister R.K. Singh has shed light on the ongoing renewable energy dispute between Andhra Pradesh government and the Union Government.
Singh explained that distribution companies (DISCOMs) in Andhra Pradesh have not been paying for renewable power for over a year citing high solar and wind energy purchase prices. The state government constituted a high-level negotiation committee for the power purchase agreements (PPAs) to review, negotiate, and bring down these prices.
State DISCOMs had directed solar and wind developers to reduce the tariff and submit the revised power supply bills. The committee’s constitution was set aside by the state high court. It further brought up instances of abrupt disruptions of power supply and from wind generators and irregular power curtailment by renewable energy generators in the state.
The Ministry of New and Renewable Energy (MNRE) told the state government that contractual agreements could not be revisited unless there was a specific provision to do so or in the case of deceit or corruption. It additionally requested state DISCOMs to honor PPAs and the ‘must run’ status accorded to the wind and solar power projects.
Following the actions of the state government and DISCOMs, renewable energy generators in the state approached the state’s High Court appealing to have the orders set aside.
The high court ruled that the terms of the contract have to be honored, and the state has no say in the prices as it is to be determined by law. The court ordered that until it is determined that the price is indeed high, power cannot be curtailed. It ordered DISCOMs to honor the bills of wind and solar purchasers and to pay all pending and future bills at the interim rates of ₹2.44 (~$0,03404)/kWh for solar power and ₹2.43 (~$0.0339)/kWh for wind power.
It also directed DISCOMs to restore and reconnect wind generators back to the grid to enable them to supply power to the Andhra Pradesh Southern Power Distribution Company Limited (APSPDCL) as before.
However, despite the high court’s orders, renewable energy generators have not been paid, and the state government has filed a writ appeal against the high court’s orders.
Singh also addressed the large outstanding dues on power bills despite provisions in the power purchase agreements and the Ministry of Power’s (MoP) directions to ensure opening and maintaining of adequate letters of credit (LC) as payment security.
Singh stated that the order directed load despatch centers to implement the existing LC provision of the PPA strictly and restrict the regulator entity to procure power from the power exchanges and short-term open access (STOA) agreements where the provision was not being adhered to.
The MNRE requested the Power System Operation Corporation (POSOCO) to issue necessary directions to regional and state load despatch centers (RLDCs and SLDCs). In turn, state DISCOMs filed a writ petition in the state high court against the MoP, MNRE, and POSOCO.
In response to this, the high court passed an interim order restraining DISCOMs from blocking power transactions under the STOA or through the power exchange. The government has filed a counter-affidavit on this.
Andhra Pradesh has set a bad precedent, and the industry will take a long time to recover from this fall off. Wind and solar have been growing in India despite multiple challenges over the past year, and this is the last thing the industry needs right now.
Recently, Mercom reported that the Andhra Pradesh High Court issued a stay order on the central government’s proceedings against electricity distribution companies in Andhra Pradesh for not providing letters of credit to power generators in line with the order from the center.
Previously, the National Solar Energy Federation of India (NSEFI) requested the Union Power Minister R.K. Singh to bail out solar generators from the ongoing renewable energy dispute in Andhra Pradesh.
Nithin is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai.