750 MW of Solar Projects in Andhra Pradesh Face Serious Delays
The projects are awaiting land allocation in the solar park
August 27, 2020
The latest report by the Central Electricity Authority (CEA) claims that three projects with a total capacity of 750 MW in Andhra Pradesh are delayed due to multiple reasons.
SB Energy, Sprng Soura Kiran Vidyut, and Ayana Renewable Power had won the tender auction to set up grid-connected solar power generation projects of 250 MW each, at the Kadapa Solar Park in Andhra Pradesh, by June 20, 2020.
Mercom had earlier reported that SB Energy Seven, Sprng Soura Kiran Vidyut, won the project at a tariff of ₹2.70 (~$0.039)/kWh while Ayana Renewable Power secured it at ₹2.71 (~$0.0394)/kWh.
These projects come under the Ministry of New and Renewable Energy’s (MNRE) 5,000 MW Viability Gap Funding (VGF) program. However, the CEA report claims that Andhra Pradesh Solar Power Corporation Private Limited (APSPCL), the entity formed to set up solar parks in the state, has not awarded the land.
Most of the land earmarked for the project is government land, yet the solar park developers have not received a No Objection Certificate (NOC) or subleasing permission.
The report also states that APSPCL is yet to award the contract for the construction of the grid substation and transmission lines. The tariff adoption for the projects was delayed as the state government chose to renegotiate all tariffs, which led to a public hearing by the Andhra Pradesh Electricity Regulatory Commission (APERC).
However, the Appellate Tribunal for Electricity (APTEL) overruled APERC. The process took more than a year, and the solar park developers sought an extension in the Power Purchase Agreement (PPA).
In March, APTEL had also issued a tariff adoption order for 750 MW of solar projects in Ananthapuramu solar park auctioned by NTPC. This was in response to the petition filed by solar developers against Andhra Pradesh DISCOMs, who sought tariff renegotiation through APERC.
The Solar Energy Corporation of India (SECI) wrote to the state distribution companies (DISCOMs) for the extension of Power Sale Agreement (PSA) timelines, since there are back to back PSAs with the DISCOMs for these projects.
The report further commented that a unilateral extension of PPA would not serve any purpose, and despite several reminders, there was no positive response from the state government.
According to the CEA report, of the total 18 GW of tendered solar power projects, 13 GW were allocated. Of the total 18 GW, PSAs were not signed for around 10 GW of projects, and PPAs have not been signed for 8 GW of projects.
Speaking to Mercom, a project developer commented, that initially the process was hindered due to the delay in tariff adoption, and later the land allotment was also stalled due to the pandemic. The three developers have paid ₹1.2 billion (~$16 million) each as solar park charges. A total of ₹3.6 billion (~$48 million) that was paid as park charges has been locked up for over a year; the land lease agreement is signed, lease rent is paid for two years. The pandemic has added to the delay, but it would not be right to say these projects may not come up.
The developer also pointed out that once the tariff is adopted and power procurement approval is given, the DISCOM does not have the option to say that it will not buy the power from these projects.
This is a central government project auctioned by SECI in a solar park with financial assistance from MNRE. The central government would need to ensure the successful execution of this project. SECI and NTPC currently enjoy investor’s confidence. But this development could adversely affect the investment in the state . This, in turn, could gravely impact the government’s 175 GW renewable target.
The government has invited foreign direct investment into the sector, now they have to protect the investments of these foreign investors.
In a similar case concerning the 750 MW NTPC project at Ananthapuramu solar park, NTPC immediately after receiving the tariff adoption approval by APTEL issued timeline extension regarding PPA signing and the scheduled date of commercial operation for the project. The same approach should be adopted for the Kadapa solar park projects too.
Andhra Pradesh has been creating hurdles for renewable energy developers for the past two years. Now, the state proposes to set up 10 GW of solar projects to benefit the farmers in the state. The state needs to realize that after setting such a bad precedent, it would be ambitious to expect fresh renewable energy investments in the state.
Mercom had also reported that 1.4 GW of solar projects that were awarded under the National Thermal Power Corporation’s (NTPC) 2 GW auction had been canceled due to regulatory delays. The canceled projects were earlier awarded to ACME Solar, Shapoorji Pallonji, and Azure Power projects for 600 MW, 500 MW, and 300 MW, respectively.
Image credit: Ceinturion / CC BY-SA