On November 18, 2019, the Government of Andhra Pradesh (AP Government) amended its Wind – Solar Hybrid Power Policy 2018 (AP Power Policy). This amendment was in response to a statutory audit which reported an abnormal spurt in the cost of purchasing power. The AP Government has made the amendments in order to address the deteriorating financial position of the state's power distribution companies (APDISCOMS).
What are the key amendments made?
- Transmission and Distribution charges for wheeling of power
Before the amendments, the AP Power Policy provided incentives in the form of exemption of payment of the transmission and distribution charges (only for connectivity to the nearest Central Transmission Utility (CTU) via the State Transmission Utility (STU) network) for inter- state wheeling of power. Subsequent to the amendment, the Andhra Pradesh Electricity Regulatory Commission (APERC) would now determine the transmission and distribution charges to be paid to the concerned distribution / transmission licensees for connectivity to the nearest CTU via STU network for inter- state wheeling of power and via STU for intrastate wheeling of power.
- Energy banking
The earlier AP Power Policy provided for the 100% banking of energy throughout the year and that the unutilized banked energy would be purchased by the APDISCOMs at a rate determined by the APERC. However, these provisions have been removed by the amendment to the AP Power Policy.
- Tariff costs
The earlier AP Power Policy provided that the APDISCOMs would procure around 2,000 MW of solar power capacity in a phased manner within the next 5 years depending on the requirement in the state. The APDISCOMs would enter into long term PPA of 25 years with developers who are selected based on a competitive procurement process and at a tariff rate discovered by this process. However, the amendment states that, the aforementioned tariff discovered as such (or determined through any other process) for renewable energy projects will not exceed the difference between pooled variable cost and balancing cost. The APERC will now determine the pooled variable cost and the balancing costs.
The amendment states that all land allotment done by the AP Government will be done only on a leasehold basis. The earlier AP Power Policy provided that the District Collector would hand over land to the Non-conventional Energy Development Corporation of Andhra Pradesh Limited (NREDCAP) which would in turn enter into lease agreement with the developer collecting lease rentals for 25 years at 10% of the value of land with 10% increase every five years from the date of commissioning of the project.
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