Visakhapatnam: The Andhra Pradesh government has finalised tenders for the setting up of solar plants to generate 6,400MW across 10 parks in the state on Thursday. Four parks are coming up in Kadapah district, three in Anantapur, two in Prakasam and one in Kurnool.
The government is aiming to reduce the subsidy burden resulting from supply of uninterrupted free power to farmers.
Another concern is the burden of the power purchase agreements (PPA) executed by the previous TD government at exorbitant rates.
The average power procurement cost of AP as of now is close to Rs 5.2 per kWh. Therefore, the YSRC government has formulated an approach to procure power from the proposed solar projects.
This would ensure reliable daytime power to farmers and reduce the subsidy burden on the government, thereby making the functioning of the sector sustainable.
The process also has resulted in the government securing close to 14,000 million units of power per annum at a tariff of Rs 2.48 per kWh, which is significantly lower than the tariff at which AP Distribution Utilities are procuring power.
Supply of free power to farmers entails a huge subsidy burden on the state government. The state has to incur close to Rs 10,000 crore as subsidy to meet the revenue gap of the distribution utilities. The key ingredient of the subsidy component is the power purchase cost which is prohibitively high.
This low tariff of Rs 2.48 would result in a savings of nearly Rs 3,800crore in the first year. This savings are likely to increase over the years, considering the fact that the present tariff of Rs 2.48 for the energy from the 6,400MW solar power project would remain constant over the next 30 years. This is so whereas the cost associated with power intake from some other sources is likely to go up.
The present benefit accruing to AP government exchequer over the life of this project can be estimated at Rs 50,000 crore.
Further, the plant was conceived on BOT (build operate transfer) 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 CUF, ensuring plentiful supply of power at very low cost.
The bid received for development of the project in CS Puram is higher at Rs 2.58 per kWh and the committee is examining whether such a high-priced bid should be accepted. Tenders have been filed by big players such as NTPC, Adani group and Torrent power, placing their bids to develop the project.
The first phase that stretches over 10 different locations has attracted a total of 24 bids in all.
