Andhra Pradesh to reconsider buying power from new green projects

Bloomberg | | Updated on: Jul 04, 2019

An electricity exchange functions on the lines of commodity exchanges. It also provides a payment security mechanism to the buyers and sellers | Photo Credit: M_Karunakaran;M_Karunakaran -

The State government is likely to scrap the agreements for the projects in pipeline


The Andhra Pradesh government is considering scrapping its decision to enter into power purchase agreements for all upcoming clean energy projects.

The so-called in-pipeline projects under review include 21 wind power plants, a 600 megawatt hybrid project by Siemens Gamesa Renewable Energy SA and another one by Axis Energy Group, according to the minutes of a June 26 meeting by Chief Minister Y.S. Jaganmohan Reddy reviewed by Bloomberg.

The move is an effort by the newly elected state government to unravel the ad-hoc processes to award projects in the past and to ensure transparency in the power sector, according to PV Ramesh, special chief secretary to Reddy, who was part of the discussions and verified the authenticity of the document seen by Bloomberg.

A committee of senior cabinet ministers has been set up to look into the issues raised, the official said by phone, adding that some of the in-pipeline projects were in the process of implementation.

Andhra Pradesh’s decision could adversely impact the Centre’s goal of installing 175 gigawatts of renewable capacity by 2022. The South Asian nation has awarded some of the world’s lowest green energy tariffs and became the biggest auctioneer of solar and wind capacity last year, according to Bloomberg NEF. The Narendra Modi’s administration has managed to achieve less than half of the target currently.

Read also: Green energy to constitute over half of India's capacity addition by 2030

The state government is also looking to cancel the short-term power purchase pacts with Lanco Infratech Ltd. and Spectrum Power Generation Ltd. for their natural gas-based plants and re-allocate the fuel to the GMR Vemagiri plant. Its also looking to scrap a land allotment to Greenko Group for a solar-wind hybrid project.

Read more: Andhra CM trains guns on TDP, Chandrababu again

Siemens Gamesa’s spokesman and Greenko’s spokeswoman didn’t respond to emails seeking comment. Axis Energy officials weren’t immediately reachable. Lanco and Spectrum officials didn’t immediately respond to requests for comment.

The state has said separately it will renegotiate some power purchase agreements for renewable projects to improve the finances of its electricity retailers, which owe ₹20,000 crore ($2.9 billion) to generators mainly because of abnormally priced wind and solar power purchase agreements.

Andhra Pradesh had 7.7 gigawatts of installed renewable and 14.6 gigawatts of fossil-fuel power capacity at the end of May, government data shows.

Published on July 04, 2019
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