AP High Court Throws Out 6.4 GW State Solar Auctions

The Andhra Pradesh High Court declared yesterday that the state government’s  6.4 GW solar project auctions were bad in law, and  quashed the request for selection (RfS) and power purchase agreement (PPA)  for the same. The move follows a petition filed by Tata Power Renewable Energy in January this year, where it was contended that the initiation and process of selection contravened rules as laid down in the Electricity act (2003).

The Andhra Pradesh Green Energy Corporation (APGECL) was the specially designated state agency that carried out the process in January 2021.

Shri Venkatesh of SKV Law Offices, that  represented Tata Power said, “Electricity Act, 2003 is a complete code and issues such as competitive bidding must be in terms of Act and the Regulator has an intrinsic role to play in such transactions. In this case however, AP had carved out a method outside the Act and also outside the scope and powers of Regulator, which in our view is not permissible. This is what has been held by the Hon’ble High Court as well.”

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The auctions, where the final award of tender was on hold pending the high court proceedings, had seen Adani Green Energy (AGEL) emerging the big winner , winning over 3 GW in the 10 projects of 600 megawatt (Mw) each under the tender. NTPC, a surprise participant , had  won a single 600 Mw package in the auction

The auctions were notably given a miss by some of the biggest developers who had been caught up in the earlier state government decision to cancel all agreements signed by its predecessor in 2019, affecting almost 9 GW of projects in the state. Not only did the state government try to force developers to agree to lower rates, it also tried to put pressure on them by delaying payments owed for operating power projects in the state. The state has faced repeated setbacks on that decision too, with both the MNRE and courts tending to rule with the aggrieved developers.

Consequently, the state government made its own new 6.4 GW bids a prestige issue, pulling out all stops to ensure that it not only got a response, but that the new prices would be lower that the ones it had cancelled earlier. And on doing so, keep all its concessions and related issues outside the purview of stricter scrutiny. It was a plan that was always a very high risk one, and to its credit, they almost pulled it off with the bidding process and the prices they discovered. However, it is worth highlighting that SECI auctions held after this particular auction did reach prices as low as Rs 2 also, from the same bidders (NTPC) in some cases.

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However now, it appears clear that all it will achieve finally is an unnecessary and  expensive delay in capacity addition of at least 2-3 years minimum. Andhra Pradesh, from being one of the leading states in renewable energy, will probably be left ruing what could have been.