Centre asks Andhra Pradesh to continue with existing power purchase agreements

The Ministry of New and Renewable Energy has written to the Andhra Pradesh government seeking continuity of existing power purchase agreements (PPAs).

“Revisiting PPAs shakes the confidence of investors in the sector and adversely affects the future bids and investment in the State and the country. I shall be grateful if you could kindly apprise the Chief Minister of the above facts,” Anand Kumar, Secretary, Ministry of New and Renewable Energy said in a letter to LV Subramanyam, Chief Secretary at the Government of Andhra Pradesh. Kumar said he was writing this letter after reports stating that the AP government is objecting to the price at which solar and wind energy is being procured by the State.

CERC norms

“Various renewable energy project developers sign PPAs with the State Government either under Section 62 or Section 63 of the Electricity Act. In the first case, the tariff is fixed by the State Electricity Regulatory Commission in line with the Central Electricity Regulatory Commission guidelines and in the second case the tariff is arrived at through transparent open competitive bidding. In both cases, SERCs conduct public hearings before adopting the tariffs and signing the PPAs,” he said.

Shortly after taking charge, the YS Jagan Mohan Reddy-led AP government has been reviewing infrastructure projects awarded during former Chief Minister N Chandrababu Naidu’s regime.

“Recent projects in both wind and solar power have been awarded through transparent and competitive bids. It seems Jagan wants to take on projects that were offered on a nomination basis,” a representative at a renewable energy power generation association told BusinesssLine. “If corrupt practices are established, there are provisions within the law to scrap projects at any stage. But cancelling projects without any reason is not the way to go about things,” an MNRE official said.

AP’s growth

Kumar spoke about the Centre’s target to achieve a total installed capacity of 175 giga watts from the renewable energy sector by 2022 and felt the move to revisit PPAs would dent confidence.

Over the past five years, Andhra Pradesh has seen its renewable energy capacity going up to close to 7.5 GW, with wind power accounting for about 4.2 GW and the rest coming from solar PV installations.

With inputs from Our Hyderabad Bureau