By Khushboo Goyal
In June 2018, the Andhra Pradesh government signed power purchase agreements (PPAs) with NTPC Limited (NTPC) for the procurement of 750 MW of power from three solar power plants of 250 MW each. Being developed by Sprng Energy, Ayana Renewable and SB Energy as part of the Ananthapuram-I Solar Photovoltaic Power Project (Phase II), power from these plants will be procured at Rs 2.72 per kWh. Further, a 2 per cent rebate will be offered to the state discoms as an incentive for timely payments. These projects are expected to start supplying power in a few months.
With the addition of 750 MW of new capacity, the state of Andhra Pradesh will move closer to its target of installing 9.8 GW of solar power capacity by 2021-22. The state has set a total renewable target of 17.95 GW, which represents about 10 per cent of the national target. Of this, 8.1 GW is for wind energy and 500 MW is for biomass power. The state currently has an installed renewable capacity of around 7.5 GW, of which wind power accounts for 4.1 GW, solar for 2.6 GW, while small-hydro power and biomass are present in small amounts.
Solar versus wind
Andhra Pradesh is blessed with a variety of renewable energy resources. It has the potential to develop 44 GW of wind energy and 38 GW of solar energy. The Rayalaseema belt lying in the southern part of the state is particularly favourable for the development of both solar and wind energy. This region with an area of 68,000 sq km (as per the 2011 Census) covers the four districts of Ananthapuram, Chittoor, Kadapa and Kurnool, and is home to the majority of wind power projects in the state. In fact, all four solar parks with a total capacity of 4 GW are being developed in this region.
Even with a high energy potential and adequate land resource availability, capacity additions in the state have slowed down since 2017-18. In the wind energy segment, the adoption of competitive bidding could be one of the reasons. The state has not released any wind energy tenders so far. Another reason is the renegotiation of 41 PPAs, which were signed at higher feed-in tariffs in 2015-16 and 2016-17. The discoms wanted the PPAs to be revised as per the prevailing auction-based tariffs and central government incentives to be passed on to the discoms instead of developers, affecting 832 MW of wind projects. This significantly dampened the confidence of developers and investors in the state. Thus, despite being at the forefront of wind capacity additions in 2016-17, adding about 2 GW, the state developed only 334 MW in 2017-18.
In the solar segment too, capacity addition has slowed down in the past year owing to multiple delays in the commissioning of solar parks. Issues related to transmission, land acquisition and obtaining approvals are the primary reasons for this setback. However, the situation is not as bad as in the wind energy segment, and has been mostly resolved that is evident from the upcoming capacity of 750 MW.
New initiatives
The Andhra Pradesh government has made significant efforts to increase renewable energy uptake in the state, including the promotion of solar pumps in agriculture for better demand-side management of power in the state. To this end, New and Renewable Energy Development Corporation of Andhra Pradesh Limited (NREDCAP) issued a tender in July 2018 for the installation of 25,000 off-grid solar PV water pumping systems. Prior to this, in January 2018, NREDCAP had issued a tender to procure and set up 5,000 solar-powered water pumps, as part of the off-grid and decentralised solar applications programme.
Although the current installed capacity of rooftop solar systems is quite small, the state government has been making efforts to increase the deployment of these systems. To this end, NREDCAP has released back-to-back tenders for the development of rooftop projects in the state. In June 2018, the agency launched a tender to set up 15 MW of grid-connected rooftop solar PV project capacity under the RESCO (renewable energy service company) model on government buildings across the state. Prior to this, a tender to empanel rooftop solar installers was issued by NREDCAP in April 2018 for setting up a total capacity of 35 MW with projects ranging between 1 kW and 500 kW. In the same month, Southern Power Distribution Company of Andhra Pradesh Limited also released an engineering, procurement and construction (EPC) tender for the development of 4 MW of grid-connected solar rooftop projects (2 MW each) in Tirupati and Vijayawada.
At a time when obtaining approvals for open access projects has become challenging in most of the states in India, the UK-based Downing has commissioned the 11.2 MW Kambadur open access solar project in Andhra Pradesh. This is part of the larger 20 MW project set up in the states of Telangana and Andhra Pradesh to sell power through open access to commercial and industrial customers. This proves the state’s firm resolve to promote renewable energy uptake.
Focus on emerging technologies
The state government has been proactive in the adoption of new technologies. Andhra Pradesh was one of the first states in the country to draft a solar-wind hybrid policy, released in 2016. It has also set a target of adding 3 GW of solar-wind hybrid capacity against the total target of 17.9 GW for solar and wind. Consequently, Andhra Pradesh has been chosen by the Solar Energy Corporation of India (SECI) as the location for its first large solar-wind hybrid project. To this end, SECI has issued a tender for the development of a 160 MW solar-wind hybrid power project with a battery energy storage system to be set up in EPC mode at Ramagiri, in the Ananthapuram district of Andhra Pradesh.
Interestingly, a second solar-wind hybrid plant is also being developed in the state by IL&FS Energy Development Company Limited (IEDCL). The United States Trade and Development Agency has provided a grant to IEDCL for the development of a 41 MW wind-solar hybrid project with energy storage in Andhra Pradesh. A US-based firm, Black & Veatch, will provide technical assistance to IEDCL in the pre-implementation and pre-construction activities for the project.
Andhra Pradesh is also one of the destinations of choice for manufacturers of innovative technologies. In fact, the world’s first-ever thermal battery manufacturing plant was inaugurated in Andhra Pradesh in August 2018. The plant is owned by Bharat Energy Storage Technology Private Limited, which aims to create a battery capacity of 1 GW till 2019 and upgrade the manufacturing capacity to 10 GW by 2025.
Outlook
With renewable energy contributing roughly 23 per cent to the total energy generated in the state in 2018-19 (as of August 2018), the outlook for the sector in Andhra Pradesh looks bright. Apart from a few hiccups like commissioning delays in solar and a cautious approach towards wind auctions, the state has so far managed to remain a top renewable energy producer. The upcoming solar-wind hybrid plants and solar parks will further strengthen its position.
However, the interest of private parties, both developers and investors, is crucial for the realisation of the state government’s vision. It is also important that the government and discoms are not swayed away by the tariff game and instead focus on the sustainable development of the entire sector.
