VIJAYAWADA: The State government has made amendments to the scheme of setting up 10,000 megawatt (MW) solar plants to provide 9-hour free power to the agriculture sector, for ‘more competitive tariff in bidding’ and ‘smooth completion’ of the project as per schedule. The amendments include increasing the tenure of the power purchase agreement (PPA) with the solar power developer (SPD) to 30 years from 25, extending government guarantee, in addition to the already approved letter of credit, and bringing down land lease rental.
The justification provided by the government, according to an order (MS 25) issued by Exofficio Principal Secretary (Energy) G Sai Prasad on Saturday, for extending the PPA by five years is that the Union Ministry of New and Renewable Energy’s (MNRE) tariff based competitive bidding (TBCB) guidelines state that the PPA should not be less than 25 years.
“Hence, the proposed change is in line with the MNRE guidelines and the proposed increase in the PPA tenure will reduce levelised tariff and cash outflows to the State government for the entire PPA period, which is made after deliberations by APGECL,” he said.
After 30 years, SPD shall ‘mandatorily’ sell project
After 30 years, the SPD shall ‘mandatorily’ sell the project, including all its assets, to the APGECL or nominee of the State government at Rs 5 per MW. “Sale of assets, if solar modules work beyond 30 years (with replacement of solar modules by APGECL as required), will benefit the State by generating cheaper power with nominal operation and maintenance costs, using the same civil and electrical infrastructure,” the government said in the order.
It also said that MNRE’s TBCB guidelines state that the end procurer ‘may choose to provide’ the State government guarantee to ensure adequate security to the SPD. “Providing the State government guarantee will improve the risk profile of the project and lead to developers quoting more competitive tariff,” the Ex-officio Principal Secretary said.
The government has also brought down the land lease rental to be paid by SPDs from Rs31,000 per acre per year (Rs25,000 to the landowner and Rs6,000 to the government) to Rs25,000. As the developer will recover the Rs6,000, which is remitted to the government earlier after the end of the tenure, the order said that the government will benefit due to decrease in land rental.
A greenshoe option to develop up to 50 per cent additional capacity subject to mutual agreement between the SPD and the APGECL, was also included in the scheme. “This is likely to help the APGECL set up additional solar capacity at lower tariff,” the order noted. Further, generation compensation for backdown will be given only if it is more than 2 per cent. Changes were also made to the one-time project co-ordination/ facilitation fee/ land purchase cost, common infrastructure development and others.
It maybe recalled that the APGECL has submitted tenders for power plants in 10 locations with a cumulative capacity of 6,050 MW to the Judicial Preview Committee. The tenders for the solar power plants will be floated in a week or two after the judicial preview vetting is completed, the officials said.
Land rental decreased
Government has brought down the land lease rental to be paid by Solar Power Developers
from Rs 31,000 per acre to Rs 25,000