Andhra Pradesh’s solar plans hit as HC cancels 6,400 MW auctions

The Andhra Pradesh High Court has cancelled the auctions held by the state government in February for creation of 6,400 mega-watt (MW) solar power capacity, denting the coastal state’s ambition to reduce power tariffs by building low-cost renewable energy units. Ruling on a petition filed by Tata Power Renewable Energy, the court stated the whole tendering and auction process ‘substantially deviated’ from the provisions of the Electricity Act, 2003, and the guidelines for competitive bidding.

The court allowed the state to invite fresh bids to build the capacity, after aligning the bidding conditions with the Act and the relevant terms. Analysts feel that the new auctions, if any, will likely discover higher tariffs due to rise in price of solar modules and upcoming import restrictions which will drive up equipment costs.

This is for the second time the state’s solar power plans hit the judicial hurdle. Immediately after assuming power in 2019, the YS Jagan Mohan Reddy government had sought to revise the solar and wind power purchase agreements (PPAs) signed by the previous government, saying these were “abnormally priced” and might have been linked with “mala fide intentions”. The HC subsequently struck down the government’s order to renegotiate PPAs, and directed the discoms to pay more than 7,500 MW of wind and solar plants at a provisional rate of Rs 2.43 per unit — against the Rs 4.84 per unit tariffs they were receiving earlier — till the legal disputes are resolved.

As FE reported earlier, the state had received the lowest bid of Rs 2.47/unit against tenders invited in December 2020; Adani Group, Torrent Power and state-run NTPC were among the lowest bidders, with Adani offering the most competitive rates for 3,000 MW.