Andhra Pradesh: 6,400 MW project to save state's exchequer Rs 50,000 crores

Amaravati (Andhra Pradesh) [India], February 5 : The Andhra State Government has said that the 6,400 Mega Watt (MW) Solar Power Project will provide 9 hours of uninterrupted power to farmers and save the state's exchequer, Rs 3,800 crores in the first operational year and Rs 50,000 crores within its life span.
The Solar Power Project power will be procured at just 2.48 per kilowatt-hour whereas the average power procurement cost of the State as of now is close to Rs 5.2 per kWh, according to a press statement from Andhra Pradesh Chief Minister's office on Thursday.
"The tender for the development of a 6,400 MW solar power plant has resulted in the Government securing close to 14,000 million units of power per annum at a tariff of 2.48 per kWh, which is significantly lower than the tariff at which AP Distribution Utilities are procuring power", read the statement.
It said, "The state is having to incur close to Rs 10,000 crores as a subsidy to meet the revenue gap of distribution utilities. The key ingredient of the subsidy component is the power purchase cost which as of date is prohibitively high. Another element contributing to the huge power purchase cost is the burden of the Purchasing Power Agreements (PPA) executed by the previous TDP Government at exorbitant tariffs."
The statement further said that the plant was conceived on a Build-operate-transfer (BOT) basis and would therefore be transferred to the state after the expiry of the PPA. At the time of transfer, the plant would be operating at 18 per cent Capacity Utilisation Factor (CUF) ensuring a plentiful supply of power at a very low cost.
The CMO's statement went on to criticise the previous government saying "The TDP Government has executed PPAs to procure a large capacity of wind power at an exorbitant tariff of Rs 4.84 per kWh along with income tax and electricity duty reimbursements. The TDP Government has also executed PPAs to procure large quantities of solar power at Rs 5.25 per kWh to Rs. 5.90 per kWh during the period 2014-2017."
"The developers got unreasonably high returns on their investments and the State Government and the DISCOMS have been subjected to a very huge financial burden owing to these high-priced PPAs," it said.
"It is important to note that in 2017 alone, 41 wind PPAs were executed by the TDP Government at the expensive tariff of Rs 4.84 per unit, as described above. As against that, a tariff of 2.43 per kWh was discovered in the GUVNL (Gujarat Urja Vikas Nigam Limited) wind power tender. Further, all the wind power PPAs executed by the TDP Government were on nomination basis and not on a competitive bidding basis," the statement added.