AP Offers 25% Subsidy For Solar and Wind Energy Manufacturing

Andhra Pradesh (AP) has released operational guidelines for implementing its clean energy policy. These guidelines cover key aspects such as approvals, resource allocation, land allotment, incentives, and statutory clearances. To streamline the approval process, NREDCAP will be required to create a Unified/Single Desk Portal.

Through this portal, the government can allocate resources and facilitate the implementation of Clean Energy Projects and Renewable Energy (RE) Manufacturing Projects under the AP ICE Policy 2024. The regulation also provides a 25% subsidy on Fixed Capital Investment (FCI) for solar and wind energy manufacturing plants, including captive generating plants and captive mines.

Additionally, the guidelines outline the application process for project developers seeking resource or capacity allocation. It specifies the required application fee and documentation for establishing Clean Energy Projects and RE Manufacturing Projects. The policy states that the State Nodal Agency (SNA) will review fully completed applications and grant approvals for Clean Energy Projects up to 40 MW (40 MWp for solar projects) within 14 days. For projects exceeding 40 MW, applications will first be reviewed by the New & Renewable Energy Development Corporation of Andhra Pradesh (NREDCAP) before being forwarded to the State Investment Promotion Committee (SIPC), the State Investment Promotion Board (SIPB), and the Government of Andhra Pradesh (GoAP) for final approval.

Clearances and Approvals

According to the latest guidelines, the Clean Energy Projects (excluding PSP, BESS, Green Hydrogen and its derivatives, Biofuels, and Electric Vehicle Charging Infrastructure) with capacities up to 40 MW (40 MWp for solar projects) will be approved by the SNA. Additionally, for projects above 40 MW (40 MWp for solar projects), the SNA will conduct an initial review before forwarding the proposal to SIPC, SIPB, and GoAP for approval.

Land Lease Payment Guidelines

The latest operational guideline started, “For government or revenue land leases, the regulation states that developers must pay INR 31,000 per acre per year, with a 5% escalation every two years. This entire amount will be remitted to the Revenue Department, GoAP.”

Whereas, for private/patta land leases involving NREDCAP, the rules stated, “Developers must pay INR 31,000 per acre annually. Of this, INR 30,000 per acre per year will be paid to the landowner, while INR 1,000 per acre per year will be paid to NREDCAP for the first and second years. After that, the same proportional payment structure will continue, with adjustments based on escalations.

Time Extension by NREDCAP

The NREDCAP also allows a permissible time extension of six months during Phase A – Allotment Phase, subject to a time extension fee of INR 20,000 per MW per month of delay, along with applicable GST. Failure to achieve any of the pre-defined project milestones within the specified timelines, including the permissible extension period, will result in the deemed cancellation of the project and the reallocation of resources (land and capacity). Additionally, the Performance Bank Guarantee will be encashed or forfeited.

The regulation also stated, “If the project enters Phase B – Project Construction Schedule, an extension may be granted with a penalty of 0.25% of the project cost per quarter for a maximum period of six months. Beyond a six-month delay, no incentives will be available for the project. Moreover, developers must return the allocated resources to the SNA within 14 days of receiving the deemed cancellation notice.”