After High Court Stay on PPA Move, Andhra Strikes with Curtailment

The Andhra government has decided to curtail renewable generation in the state after state High Court put a stay on its order to renegotiate RE tariffs

The newly elected Andhra Pradesh government has decided to curtail renewable power generation in the state after the state High Court put a stay on the government’s order to renegotiate tariff agreements for renewable projects signed under the previous government.

The state had, in its July order, had asked renewable energy companies to renegotiate contracts signed with the previous regime, drawing strong protests from the developers. The High Court had then issued a stay order on the renegotiation of solar and wind PPAs, which is valid till August 22. Since then, the discoms of the state have been curtailing renewable power.

The curtailment was in response to the request from the regional grid operator to reduce generation, but the standard practice is to back down thermal generation as renewable energy generators are given a “must run” status under the grid code. Thus, in spirit as well as letter, the move by the state government continues to take it on a confrontationist path with the sector and central government.

The decision to curtail the generation in the first two days had led to a loss in power generation to the tune of 50 GWh for the states’ RE operators, with losses increasing exponentially. Following which they had approached the Ministry of New and Renewable Energy (MNRE) to direct the state government to stop the curtailment.

In response to this, the minister had issued an industry wide letter asking all states to ensure that the “must-run” status of renewable energy plants under the national grid code must be honoured and followed, and has said that if supply from these units is curtailed, the reason must be given in writing to generating companies.

“It has come to the notice of this ministry that in violation of above regulations some state load dispatch centres (SLDCs) are resorting to large-scale backing down of wind and solar energy,” said the letter written by B P Yadav, joint secretary in the ministry. The letter also said “if any SLDCs curtail wind or solar power for reasons other than grid safety, they would be liable for losses incurred by the solar or wind power generator.”

Minister of Power and New and Renewable Energy, R K Singh has now said that the “Power Purchase Agreements are sacrosanct. And that no concluded agreement can be opened.”

The court has since also reaffirmed the “must run” status and has asked the government to provide justification for curtailment.

It is believed that stand-off between the state and the operators have put nearly 5.2GW of pipeline renewables capacity, including nearly 3.9GW of wind, under threat, worth well over Rs 20,000 crores. 

While talk has been focused on solar contracts, bearing the brunt have been the wind developers, as far as curtailment goes. With each passing week, and the next court hearing on August 22, it becomes absolutely imperative for the affected parties here to find a solution, as there can be no winners from this developing mess, quite frankly.