Andhra Pradesh Solar Tender
Andhra Pradesh is one the major Southern states with a big solar subsidy policy and it recently enacted a reverse auction
for 1000 MW of solar capacity. The government finally fixed Rs 6.49/KwH as the price to be paid to the bidders, which seems very low compared to the other states in the country. The price is also arbitrary as it is common across all plants sizes and all locations in the state. It is not a surprise to see that almost 80% of the bidders have been scared away by this deal.
The state is now claiming that it has got letters of acceptance for 441 MW. I am not sure how these bidders will make money at this low price, especially those with small plants in less sunny areas. While the prices of solar panels are currently low, they might suddenly increase as demand is starting to rise globally. There is little leeway in terms of profitability and many of these plants might not get built. The state government should re-tender the entire thing and think about its solar policy. While getting a low price for the solar power generation is a good thing, it may be counterproductive if too low a price sees most of the entities go tail up. The case of the ultra mega thermal power plants should be a good reminder to the state government. A giant thermal plant in AP is not getting built by Reliance Power ,which bid too low a price for the sale.
Andhra Pradesh which is one of the biggest southern states in the country has now come up with a new solar policy which looks very different from the reverse auction solar policies announced by other states. Note AP is suffering from one of the worst power deficits in the country with industries finding it difficult to function in the absence of power. With India’s power policy mostly in a mess, states are being compelled to look at alternative sources of power particularly solar energy whose costs have fallen off a cliff in the last couple of years. While most states have given out solar ground mounted farms to project bidders, Andhra Pradesh has differentiated by giving out a number of soft and hard policy incentives to solar energy generators in the state. Here are some of the key features of the new solar policy.
There will be no wheeling and transmission charges for wheeling of power generated from the Solar Power Projects, to the desired location/s for captive use/ third party sale within the state through 33 KV system subject to industries maintaining their demand within its contracted demand Cross subsidy surcharge shall not be applicable for Open Access obtained for third party sale within the state subject to the industries maintaining their demand within its contracted demand with the DISCOMs.
All Solar Power projects will be exempted from paying Electricity Duty for captive consumption and third party sale within the state. All projects developed with the above incentives will also be eligible for REC benefits. Deemed injection into the grid for in-house captive solar generation plant (in the same premises) will be considered for issue of REC. Solar projects will get refunds on value-added tax paid for equipment and on land duty and registration charges for sites. Fast Track Approval Process permits to build grid connections within 21 days. These incentives will be in force for a period of seven years from the date of implementation. New and Renewable Energy Development Corporation of A.P. Ltd (NREDCAP) shall be the State Govt. Nodal Agency for clearance, facilitation and implementation of the proposed Solar Power Policy. These incentives will be available for 7 years for solar power plant developers building a solar panel plant till June 2014.
Google+Andhra Pradesh has received offers for setting up 418 MW of solar photo voltaic power generation capacity under the State’s solar policy. Following the bidding process, where competitive bids were offered for setting up of 1000 MW, 331 bids were qualified from the 184 bidders for 161 locations notified. In the request for submission and finally 35 bidders with a total capacity of 418 MW accepted solar power purchase price at Rs 6.49 per unit. Approximately, 1200 MW have been given sanctions for Grid connectivity. Further, the State Government issued another order and directed AP Transco to ensure setting up of 1000 MW Solar Power Plants through the process of Competitive bidding route.
