Solar Developer Approaches APTEL Against Andhra Govt’s Move to Reduce PPA Tariff

The ongoing turbulence in the state of Andhra Pradesh regarding the renegotiations of solar and wind PPAs does not appear to be ending anytime soon. In the latest development, a solar project developer has approached the Appellate Tribunal for Electricity (APTEL), requesting it to intervene in the state’s proceedings in the matter.

This request comes in the heels of the Andhra Pradesh Southern Power Distribution Company (APSPDCL) seeking a revision in the power purchase agreements (PPAs) and power sale agreements (PSAs) for solar PV projects executed during the term of previous state government led by Chandrababu Naidu.

Mercom previously reported that APSPDCL wrote to the Solar Energy Corporation of India (SECI) and the National Thermal Power Corporation (NTPC) asking for a revision of tariff in the PPA and PSA to ₹2.44 (~$0.036)/kWh.

Mercom has reviewed a petition filed by SEI Green Flash Private Limited, requesting that the APTEL intervene and put a stay on the operation of letter dated July 12, 2019, issued to it by the APSPDCL regarding the revision of the tariff for its grid-connected solar PV project to ₹2.44 (~$0.036)/kWh.

SEI Green Flash Private Limited had entered into a PPA with APSPDCL for a 30 MW solar PV project in December 2014 at a tariff of ₹5.97 (~$0.087)/kWh. Later, due to Force Majeure (unforeseeable) conditions, it had requested the state DISCOM to extend the scheduled commissioning date but was denied. As a result, the developer approached the Andhra Pradesh Electricity Regulatory Commission (APERC) for relief. Meanwhile, the then state government of Andhra Pradesh constituted a committee to examine the issues faced by solar PV project developers in the state.

In June 2018, the APERC passed an order reducing the tariff to ₹3.74 (~$0.054)/kWh based on the recommendations of the committee. However, the APERC did not approve the amended PPA, nor did it finalize the tariff to be paid for the period during which the case was being considered.

Later, the DISCOM approached the state commission for the PPA approval and to determine the date from which the payment was to be made. Then, the commission directed APSPDCL to make the payment at a tariff of ₹3 (~$0.044)/kWh for the power supplied until June 2018. As this tariff of ₹3 (~$0.044)/kWh was not in their interest, SEI Green Flash had approached the APTEL for relief.

Even as the matter was being considered by the APTEL, the DISCOM issued a letter to SEI Green Flash Private Limited stating that tariff be revised to ₹2.44 (~$0.036)/kWh from the approved ₹3.74 (~$0.054)/kWh. Following this, SEI Green Flash Private Limited filed a new petition with APTEL questioning the basis of the tariff revision by the DISCOM.

SEI Green Flash Private Limited has argued that tariff has already been revised once by the state commission. A second revision by APSPDCL will render the project unviable, potentially leading to the shutdown of the solar PV project.

Mercom reported that the Andhra Pradesh government recently issued a communique stating that during 2014-2019, several PPAs were signed more than the mandated 5% Renewable Power Purchase Obligation (RPPO), for up to 23% and the tariffs for these projects were high. The current state government has argued that the purchase beyond RPPO led to a loss of ₹10 billion ($146 million) to ₹15 billion ($219 million), due to the ensuing backdown costs of thermal power.