The 6,400 MW solar tender floated by the Andhra Pradesh government is likely to see the Adani Group bag 3,000 MW capacity quoting a price of ₹2.49 to ₹2.58 per kWh.

The keenly tracked solar tender of the Andhra Pradesh government was witness to total bids for 14,000 MW as against 6,400 MW floated by the government.

The Adani Group has had five of its proposals in winning bids with a total capacity of 3,000 MW, with Torrent Power and NTPC bidding for 600 MW each at ₹2.47 and 2.48 per KWH and Shirdi Sai Group is the other major bidder.

However, following a petition moved by the Tata Power Renewables Energy, challenging the tender process, as violation of MNRE norms, the AP High Court without staying the process, directed not to finalise the award of tenders.

It is to be seen if the government will go ahead with the tender as some of the recent bids have seen as low as ₹2 per kWh and one bid of ₹1,99 per kWh.

Andhra Pradesh government’s tender for the development of 6,400 MW solar power plant is aimed at reducing the subsidy burden resulting from the supply of uninterrupted free power to farmers across the state has made headlines in the recent past.

Huge subsidy burden

The process has resulted in government securing close to 14,000 million units of power per annum at a tariff of 2.48 per kWh, which is the significantly lower than the tariff at which AP Distribution Utilities are procuring power. However, this entails a huge subsidy burden on the state government. The state is having to incur close to ₹10,000 crore as a subsidy to meet the revenue gap of Distribution utilities. The key ingredient of the subsidy component is the power purchase cost which as on date is prohibitively high.

According to sources, the government is now having to pay an average power procurement cost of the State as of now, is close to ₹5.2 per kWh. Therefore, the government has formulated the approach to procure power from a 6,400 MW solar power projects to be set up in the State. This would ensure reliable daytime power to the farmers and also reduce the subsidy burden on the government due, thereby making the functioning of the sector, sustainable.

This low tariff of ₹2.48 would result in a savings of nearly ₹3,800 crore in the very first year and this savings is likely to increase over the years, considering the fact the present tariff of 2.48 for the energy from the 6,400 MW solar power project would remain constant over the next 30 years.

A conservative estimate puts the lifespan saving of ₹50,000 crore. The first phase which stretches over 10 different locations has attracted a total of 24 bids in all.

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