Weekly Update: Andhra Pradesh to sign PPAs for a capacity of 140MW
Less than planned for, but at least a start: As per the Andhra Pradesh Transmission Corporation (APTRANSCO), 60 MW of PPAs have been signed in the state until now and around 80 MW more are expected be signed soon. The tariff will be INR 6.49/kWh (EUR 0.08/kWh; USD 0.10/kWh).
- Andhra Pradesh is looking to allocate a revised target capacity of 350 MW.
- Considering to the large shortfall with respect to the earlier goal, the state has offered PPAs to any further project developer who wishes to set up the same tariff of 6.49/kWh
- Andhra Pradesh expected to extend the deadline and allow more developers to evaluate the risks and tariff conditions
The state of AP was initially looking to allocate a capacity of 1,000 MW. However, following a mid-way revision of tariffs, several developers withdrew their interest (refer). Subsequently the target was revised to 350 MW. Now, due to additional issues such as the creation of Telangana and the depreciation of the Indian Rupee, only a total capacity of 140 MW will likely to sign the PPAs under the current allocation process.
In a previous blog, we had already stated that some project developers would opt out of the Andhra Pradesh PPAs (refer). This is partly because of concerns related to the state’s political split and partly due to projects no longer being viable in the wake of increased component costs (driven by the rupee’s devaluation).
Recognizing the large shortfall with respect to the earlier goal, the state has offered PPAs to any further project developer who wishes to set up projects at the same tariff of INR 6.49/kWh. Yesterday was the deadline. Around 5 developers are known to have expressed interest. According to APTRANSCO, these applications amount to an additional capacity of as much as 500 MW. The new project sizes are typically around 100 MW, which could make them viable at the given tariff. Issues, such as land acquisition and grid evacuation capability will reduce the final capacity for which actual PPAs will be signed.
To address concerns of developers, APTRANSCO has incorporated a clause in the PPAs that states that in case the state DISCOM is restructured, its successor will fulfill the obligations of the PPA.
BRIDGE TO INDIA expects that Andhra Pradesh will extend the deadline to allow more developers to evaluate the risks and tariff conditions. We believe that this could further increase developer interest.
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