The government of Andhra Pradesh has issued an order with guidelines for implementing 10 GW solar power project programme for farmers in the state.
The programme aims to provide nine hours of free power during the day to farmers without increasing financial burden on the state’s distribution companies (DISCOMs). The programme was first announced in February 2020.
The Andhra Pradesh Electricity Regulatory Commission (APERC) has been determining agricultural subsidy on the average cost of supply model, which has three components, namely average power purchase cost, average transmission cost, and average distribution cost.
The state has proposed to replace the average power purchase cost with solar power and provide nine hours of free power during the day to farmers.
Based on the requirements, the state has issued guidelines for the programme.
The Andhra Pradesh Green Energy Corporation (APGECL), a 100 percent subsidiary of the Andhra Pradesh Power Generation Company (APGENCO), will be the executing agency for setting up the 10 GW solar project in a phased manner and for connecting it to the grid. The APGECL will procure the power through competitive bidding and monitor the projects.
APGECL will procure decentralised solar power from 132 kV and 220 kV substations wherever feasible and it can participate in venture gap funding based bidding up to 2.5 GW under the Central Public Sector Undertaking Program Phase-II.
APGECL will also be the nodal agency for developing solar parks under the Ultra Mega Solar Power Projects Program and the Ultra Mega Renewable Energy Power Park Program, as per the state’s guidelines.
The state government has also ordered for a tender approval committee comprising the secretary to the government, energy department, principal finance secretary, finance department, Chairman and Managing Director of the APGECL, Chairman and Managing Director of Transmission Corporation of Andhra Pradesh (APTRANSCO), Managing Director of APGENCO, and Vice Chairman and Managing Director of New & Renewable Energy Development Corporation of Andhra Pradesh.
APGECL is also expected to procure solar power under the build operate transfer (BOT) mode from developers for a period of 30 years. A flat tariff discovered through competitive bidding will be applicable for the first 15 years. Also, prefixed operation and maintenance (O&M) charges will be paid from the 16th year onwards and will escalate four percent every year till the 30th year.
At the end of the useful life of the solar project, it will be transferred to APGECL to reduce overall tax implications.
For the payment for power and land, the finance department will pay for charges incurred during the land acquisition process. The state government will also pay monthly energy charges to solar power developers through APGECL. A fixed tariff will be applicable for first 15 years, and O&M charges will start post that.
The land will be made available on lease to developers for setting up the solar projects in a mix of government and assigned lands. APGECL, district magistrates, and collectors are expected to survey these lands, prepare all the required records, and conduct gramasabhas.
The assigned and private lands will be leased to APGECL at a rate of Rs 25,000 (around USD 329) per acre annually. APGECL can then lease these lands for Rs 31,000 (approximately USD 408) per acre annually to solar power developers. In the case of government-owned lands, it will transfer the entire lease rental amount to the state government or based on the state’s decision.
However, the guideline has exempted projects from making payments for non-agricultural land charges.
The responsibility of setting up external power evacuation infrastructure, including transmission lines and substations has been given to APTRANSCO. It has also directed the state transmission company to use its own finance for setting up and strengthening the power evacuation infrastructure and allowed to recover costs through the aggregate revenue requirement of its transmission business.
The state government also directed APTRANSCO to set up a grid substation and a switching substation along with the required bays within one kilometer of the solar park.
The state DISCOMs have been given rights to renewable energy certificates generated from these projects and to sell them on power exchanges or other similar mechanisms. They were also directed to enter into agreements with APGECL to supply power to agricultural consumers and to get all the required approvals from APERC for the same.
