POSOCO to Examine Renewable Energy Curtailment Issue in Andhra Pradesh

Amaravati High Court asks DISCOMs and developers to submit relevant documents within a week


The Andhra Pradesh High Court at Amaravati has asked the Power System Operation Limited (POSOCO) to look into the reasons behind the curtailment of renewable power in the state.

The petitioners, in this case, were, Mytrah Vayu (Pennar) Private Limited, Mytrah Vayu (Krishna) Private Limited, Mytrah Vayu (Indravati) Private Limited, and Mytrah Vayu (Tungabhadra) Private Limited, the special purpose vehicles of Mytrah Energy, a renewable energy independent power producer (IPP). Walwhan Renewable Energy (formerly Welspun Renewable Energy), ACME Solar Holdings and its subsidiary Aarohi Solar, Dayanidhi Solar, Vishwatma Solar, and Niranjan Solar were among the other petitioners.

The petitioners had gone to court against Andhra Pradesh DISCOMs’ inability to pay the dues and resorting to the curtailment of power from the projects.

Mytrah Vayu had earlier alleged that the Andhra Pradesh Southern Power Distribution Company Limited (APSPDCL) curtailed the power generated by the projects despite the renewable energy projects being granted the must-run status. The petitioners argued that since these projects were under the ‘must-run’ status, they are not subject to “merit order despatch” which is wholly unsustainable.

The court had earlier directed the distribution companies (DISCOMs) not to curtailment power from renewable energy projects unless necessary, that too not without prior notice.

In July 2019, the Andhra Pradesh government had decided to revisit the PPAs of renewable energy projects against which renewable energy project developers managed to get a stay order on the revision of PPAs. However, even after the stay order, the state began severely curtailing wind power. The Amaravati High Court later issued an order asking the state load despatch center (SLDC) and the state’s transmission company (APTRANSCO) to stop the curtailment of power from solar and wind energy projects.

The petitioners also pointed out that the curtailment was also due to the higher tariffs in the agreement, while the DISCOMs argue that the curtailment was due to grid security. Now, since both the APSLDC and APERC are party to this curtailment and are state government bodies, the court finds it necessary for an independent central agency to investigate the facts in this matter.

So, the court has asked POSOCO, an independent central agency, to find out the reason behind the power curtailment by APSLDC and submit a report.

The court has directed the developers and DISCOMs to submit their claims to POSOCO within a week supported by documents. APSLDC has been given a week to file its objections on the claim.

The report prepared by POSOCO will then be sent to the court within four weeks.

Aditya K Singh, an advocate at HSA Advocates, told Mercom, “It appears that nowadays, curtailments are happening more for commercial reasons than due to grid security (which is permissible). This is one of the first orders where any judicial/quasi-judicial forum has taken an extra effort to constitute an independent committee to look into the justifications given for curtailment. It was also one of the allegations by the developers that they are being directed to curtail generation on the pretext of “grid security” without citing any detail of threat on the grid. High Court had observed in clear terms that the single bench had specifically given directions against any curtailment, and concerned authorities should have taken leave of the court before taking any such action. Curtailment of generation has become a regular occurrence in various renewable energy rich states and renewable energy developers which has no fuel costs, are concerned about the impacts of curtailment on project economics.”

“In the instant order, the Hon’ble High Court has taken cognizance of the action of APSCLDC,” he added.

Considering the situation of the DISCOMs in the state, and the fact that developers require liquidity to keep their projects running, the Andhra Pradesh High Court at Amravati in December 2019, had directed the state DISCOMs to immediately clear the dues of solar and wind developers within a month. According to the court’s order, the DISCOMs were directed to pay ₹2.43 (~$0.0341)/kWh and ₹2.44 (~$0.0343)/kWh to wind and solar developers, respectively. The DISCOMs then submitted an affidavit to make the payment within four weeks from December 20, 2019. Mercom has also reported that solar and wind power developers in the state are beginning to receive part of their dues in batches.

According to Mercom India Solar Project Tracker, Andhra Pradesh accounts for 3.4 GW of large-scale solar projects in operations, and approximately 1.7 GW of projects are under the development pipeline. According to the MNRE, Andhra Pradesh has 4.1 GW of wind power capacity (as of October 2019).