Andhra Pradesh RE Sector On Shaky Grounds

Over the years, the southern state of Andhra Pradesh has become the leading solar state, with massive solar and wind installations. In the last five years, the state has witnessed growth in the renewable energy sector, with capacity installations reaching 7.5 GW. Wind power installations account for about 4.2 GW while the rest is derived from solar installations. AP has differentiated itself by the execution on the ground. Its solar power policy allowed open access and no charges. The last government led by the reformist Chandra Babu Naidu has made solar energy the center of its power policy.

However, the new government formed by Jagan Mohan Reddy recently, claims that most of these PPAs are costly, and has also decided to cancel several big contracts won earlier this year. The central government dissuaded the state from doing so. It pointed out that such an action would not only be adverse for the renewable energy development of the state, but also shake investor confidence. It might also adversely affect future bids and investments. The central government emphasized on the point that the PPAs once entered should not be modified or revoked unless there is a conspiracy or a specific provision enabling such a move.

The new AP government, on the other hand, is convinced that these PPAs were corrupt and had irregularities in them and claims that they cost the government exchequer Rs 2,636 crore loss. It further went ahead and announced to reclaim the sum from those who were responsible for the loss, including the then energy department officials, energy minister and even the then Chief Minister. The new government is also eyeing at forming a committee (HLNC) to negotiate and bring down costs in all the high priced wind and solar power purchase agreements. All these actions, are bound to slow down the pace of renewable energy development in Andhra Pradesh. It remains to be seen whether these moves will bear any fruit for the clean energy sector in the southern state of Andhra Pradesh the future.