The Andhra Pradesh Electricity Regulatory Commission (APERC) has announced a new tariff of ₹2.95 (~$0.039)/kWh for 400 MW of solar projects in Ananthapuram II ultra-mega solar park that were supplying power since March 2019. These proposed were developed by Andhra Pradesh Power Generation Company (APGENCO).

A tariff of ₹3.57 (~$0.048)/kWh was proposed by APGENCO and the Andhra Pradesh Solar Power Corporation Limited (APSPCL) back in 2017. They have been paying ₹3.50 (~$0.047)/kWh since the commercial operation date (COD) of the project was declared in March 2019 and continued with the same tariff while the application was being processed.

In September, APGENCO had asked the APERC to approve its PPA with DISCOMs signed in 2017 and for the approval of a tariff of ₹3.57 (~$0.048)/kWh for power from these projects. These tariffs were not discovered through competitive bidding but were based on the tariff arrived through calculating the actual cash flow by APGENCO. The PPA was signed in 2017, and 250 MW of capacity was commissioned in October 2018. The remaining 150 MW was commissioned in February 2019.

The Commission said the new tariff would be effective from the COD and that in light of this, DISCOMs were entitled to a refund of ₹600 million (~$8.1 million). It also added that the new tariff would help DISCOMs accrue about ₹10.4 billion (~$140.8 million) in savings.

The APERC said it scrutinized the project’s tariff components concerning the Central Electricity Regulatory Commission’s (CERC) norms to arrive at the new tariff. Following this, it was able to come up with a comparable tariff to the ones discovered through competitive bidding.

The regulator said it identified that land cost could not be a tariff component while lease rentals are being charged, and the ownership of the land will continue to remain with the APSPCL at the end of the 25-year agreement period.

The APERC also found that the APGENCO’s computation for operations and maintenance (O&M) costs and escalation was not in line with the current regulations. It ordered that computing O&M charges for the last 20 years of the agreement have to be competitively discovered the same way they were for the first five years.

According to Mercom’s India Solar Project Tracker, Andhra Pradesh had 3.7 GW of large-scale solar projects in operation, and around 1.3 GW of projects are under development pipeline, as of June 2020.