Andhra Pradesh court scraps high-level PPA renegotiation committee

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The High Court of Andhra Pradesh has dealt a blow to chief minister Jaganmohan Reddy’s attempts to roll back renewables in the state by scrapping a committee set up by the politician to review signed power purchase agreements (PPAs) for solar and wind projects.

The court has issued an interim order stipulating the power supply deals must be honored and fixing a six-month period for the Andhra Pradesh Electricity Regulatory Commission (APERC) to set new electricity tariffs.

YSR Congress politician Reddy, who was elected in May, has been seeking to reverse renewable energy commitments made by his predecessor N Chandrababu Naidu, of the Telugu Desam party. The new chief minister set up a nine-man committee in July to review tariffs set by the previous regime for solar and wind power, labelling the payments “abnormally priced”.

The move was made in defiance of advice from the federal Ministry of New and Renewable Energy against renegotiating PPAs. When renewables developers persuaded the High Court to stay any revision of tariff payments, the Andhra Pradesh State Load Despatch Center resorted to curtailing renewable energy in a move described as “illegal” by lobby group the National Solar Energy Federation of India.

Confidence rocked

Chief minister Reddy then went on to scrap a 400 MW energy storage tender which had attracted proposals for battery and pumped hydro projects after being launched by Naidu and halted plans for the 960 MW Polavaram hydroelectric power plant.

Ten days after the committee was established to review PPAs, the Southern Andhra Power Distribution Company had sent letters to 139 power plants retrospectively reducing the tariff.

Power minister RK Singh this month said the PPA move in Andhra Pradesh had unnerved global investors considering financing projects across India.

“If PPAs are not honored, the pace of [the] solar [and] wind industry will slacken and investor confidence will completely erode,” solar consultant HR Sreenivasa Rao told pv magazine. “Not honoring PPAs is not solely Andhra Pradesh’s misdoing, it is prevalent in other states as well.”

The affair has represented another bruising encounter between renewables developers and state regulator APERC, which this year mooted reducing the average length of PPAs from 25 to five years. That change was never implemented.

The state hosts 12% of India’s solar and wind capacity and sourced 18% of its electricity from renewables in the last fiscal year.