India

India

Andhra Pradesh utilities seek FIT rate cuts

Two utilities in Andhra Pradesh petitioned the state regulator to revise the rate of old wind power projects that were commissioned under the Feed-in-Tariff (FIT) regime, in a response to lower prices being achieved at auctions.

The Andhra Pradesh utilities are looking to renegotiate the FIT rates for just under 4GW of the state's wind capacity
The Andhra Pradesh utilities are looking to renegotiate the FIT rates for just under 4GW of the state's wind capacity

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The petition sought a review of power sale contracts of nearly 3,965MW capacity, nearly 70% of total installations in the state.

The utilities claimed the FIT determined by the regulator was unjustly high compared to the price set in auctions and argued that parameters such as capacity factors, interest rates and return on capital were conservative, leading to higher tariffs.

Nearly, 2.35GW of the total installed capacity was contracted at an FIT of INR 4,840/MWh ($68.34/MWh), significantly more than the tariffs that emerged from the auctions, which typically come in under INR 3,000/MWh.

In late 2017, Andra Pradesh utilities asked the wind developers to give a voluntarily discount on the FIT rates, and had unofficially hinted at renegotiation of power purchase rate.

The chairman of the Indian Wind Power Association chairman Kasturi Rangan branded the petition unfair.

Speaking to local media, he said: "The petition filed by the Andhra Pradesh power utilities is an excuse to avoid paying the bills to the wind developers."

However, wind power developers can take some solace from a similar ruling by the Madhya Pradesh regulator, which comprehensively rejected the request for tariff changes of contracted projects.

In its ruling against the petition filed by a Madhya Pradesh utility, the regulator noted it was not empowered to review or revise the purchase contracts adding that the parties are bound by the terms and conditions of the contract and any alterations can only be done with mutual consent.

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