Andhra Pradesh: Solar Projects Get ₹3/kWh Tariff After a 20-Month Delay in Commissioning

APERC was examining petitions filed by APSPDCL for three solar projects totaling 82 MW


The Andhra Pradesh Electricity Regulatory Commission (APERC) has set ₹3 (~$0.042)/kWh as the tariff for three grid-connected solar photovoltaic (PV) projects in the state, aggregating 82 MW.

The APERC was examining three petitions filed by Southern Power Distribution Company of Andhra Pradesh Limited (APSPDCL) which had requested the APERC to finalize a tariff for these three projects that were commissioned in 2017.

The respondents were SEI Green Flash Private Limited, SEI Arushi Private Limited, and Rain Coke Limited. The government of Andhra Pradesh had allowed the state’s distribution companies (DISCOMs) in 2014 to procure 1,000 MW of solar power through competitive bidding. All the three companies, SEI Green Flash Private Limited, SEI Arushi Private Limited and Rain Coke Limited were Special Purpose Vehicles (SPVs) of SunEdison which were acquired by Greenko in 2016.

Later, AP DISCOMs entered into power purchase agreements (PPAs) for a capacity of 619 MW with the consent of the APERC. SEI Green Flash Private Limited entered PPA with APSPDCL at a levelized tariff of ₹7.02 (~$0.0996)/kWh for a 30 MW solar power project at Burakayalakota, located in the state’s Chittoor district. The PPA was later amended for a change of location to Adurupally, in Nellore district.

Moreover, SEI Arushi Private Limited entered PPA at a levelized tariff of ₹6.91 (~$0.098)/kWh for a 30 MW solar power project at Kadiri, in Ananthapur district.

Rain Coke Limited entered PPA with APSPDCL at a levelized tariff of ₹6.93 (~$0.098)/kWh for a 22 MW solar power project at Dharmavaram, located in Ananthapur district. Later this PPA was also amended, changing the connectivity from 132 KV to 33 KV voltage level.

All the three had failed to complete the projects on time, that was slated to be March 31, 2016. As a result, APSPDCL encashed the performance bank guarantees and issued final notices to commission the projects to the full capacity on or before September 30, 2016, failing which the PPAs would be deemed to be terminated without further notice.

Meanwhile, the project developers approached APERC to grant time till June 30, 2017 for completing the projects and commissioning them. At that time, APERC granted its permission for the synchronization of the projects with certain conditions subject to the undertakings furnished by them. Later, out of the three projects, two were commissioned in October 2017 while the third was commissioned in November 2017.

Taking under consideration the decline in solar prices in the country to record new lows, the APERC stated, “The situation being brought about mainly due to the failure of the respondents to commission their projects within the agreed or extended time limits, fixing the price to be paid for such pumped power for such period at 3.00 (~$0.04259) per unit will be striking a reasonable balance on the factual and economic considerations to be taken into account.”

Regarding all the energy that was pumped in during the period between the project synchronization and the decision, the APERC stated that the amount payable for the energy pumped into the grid from the respective commercial operation dates till June 14, 2018 will be paid in 12 equal, monthly installments by the 15th of every month, without any interest, commencing January 2019.

Delays in project commissioning are not unheard of in the domestic solar industry. Recently, the Karnataka Electricity Regulatory Commission (KERC) asked a project developer to pay the damages for the delay.

Last month in a similar case, KERC penalized Marakka Solar Power Project LL.P for delay in commissioning a 1 MW project.