VIJAYAWADA: Amid concerns that establishment of 10,000 megawatt (MW) solar plants may further burden the cash-strapped power distribution companies (Discoms) with fixed costs, the state government has clarified that it will bear the cost accrued due to backing down of thermal units, balancing cost and other charges, if any, for a period of three years from 2023-24.
Some of the AP State Electricity Board engineering associations and other experts raised reservations with the proposed mega solar power plants as the State has surplus energy and that integrating more solar power can be done only after backing down of the existing thermal units.
They are contending that backing down of thermal units or those units with which the Discoms have power purchase agreements, will result in payment of fixed costs, in addition to the procurement costs related to the solar power. This, they argued, will burden the Discoms.
The arguments were submitted to the AP Electricity Regulatory Commission (APERC) during the three-day public hearing as well.
In response to these, the government has made a statement in the public hearing noting that it will extend support to the Discoms.
“The backing down costs of thermal units that will accrue due to the proposed solar parks, will be paid by the AP government for three years from the year of commissioning. In addition to this, the balancing costs for integrating renewable energy, and other network costs, if any, will be borne by the government for the entire life (30 years) of the proposed solar plants. The payments will be made after adjusting REC revenue to the Discoms as determined by the APERC from time to time,” the statement said.
To reduce the balancing costs, the AP Green Energy Corporation Ltd (APGECL), the agency implementing the solar power plants, is also in the process of developing a forecasting model, the officials explained.
While promising to support the Discoms by paying the accrued costs, the government has not addressed other issues raised by the power engineering associations such as the future of thermal units.
The officials explained that the projects were needed to meet the growing demand for power, especially in agriculture sector.
Noting that the compound annual growth rate of energy requirement was 7 to 8 per cent, they projected the demand to shoot up by 15,000-18,000 million units by 2023-24 as against the 65,900 MU approved for 2020-21 by APERC.
To meet the increase in demand, the solar parks are being taken up as power will be available at Rs 2.5 per unit as against Rs 4.62 per unit approved by the APERC for 2020-21.
The government has planned to set up 10,000 MW solar power plants to supply free power to the agriculture sector.