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Andhra Pradesh power regulator, main generation company spar over wind energy tariff

According to reports,  Andhra Pradesh, the most aggressive state in building renewable energy capacity last year, may soon lose its momentum because of a standoff between the state’s power regulator and its main generation company over the future cost of wind power.

As it does every year, on March 30, the Andhra Pradesh Electricity Regulatory Commission (APERC) passed an order setting down the preferential tariff the state would pay for wind power in 2017-18.

But the state’s main generation company, Andhra Pradesh Power Generation Corporation (APGENCO) would rather hold auctions for all wind projects it buys power from, as it finds the set tariff to be too high.

APERC has ordered tariff of Rs 4.35 per kwH for developers using the accelerated depreciation (AD) benefit and Rs 4.76 per kwH for those not availing of it. AD, a concession given to renewable energy projects, allows developers to claim 80% depreciation in the first year after project commissioning.

But APGENCO is unwilling to pay these prices, noting that the price discovered at wind auction conducted by Solar Energy Corporation of India in February was much lower, at Rs 3.46 per kwH.

“If necessary, we will take the matter to the state cabinet, because we want to go for auctions,” said Ajay Jain, chairman at APGENCO.

He ruled out signing any more power purchase agreements (PPAs) with wind power developers till the matter was sorted out. “At best, we might take this (the regulator suggested tariff) as a benchmark tariff and go the auction route from here on,” he said. “If a Rs 3.46 tariff has been discovered, why should we sign PPAs at a higher tariff?”

APGENCO stopped signing PPAs with wind developers, including those that had completed their projects, immediately after the auction.

Andhra Pradesh started late in building renewable energy capacity, but in 2016-17, it added 2,185 MW of wind power in 2016-17, the highest of all states, followed by Gujarat (1,275 MW) and Karnataka (882 MW), to reach a total wind installed capacity of 3,600 MW.

In solar energy too, Andhra was No. 1 in 2016-17, adding 1,295 MW out of a total of 5,525 MW added across the country.

“We want to reach 4,000 MW of wind power by 2019,” said Jain.

Already within comfortable range of his target, he is not in any hurry to sign further PPAs with wind developers till the matter is sorted out.

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