New wind and solar power policies in Andhra Pradesh

By Akshay Jaitly and Vishal Binod, Trilegal
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The government of Andhra Pradesh recently released new solar and wind power policies replacing the 2012 policies. The new policies are intended to provide an impetus to the development of renewable power projects in the state and to attract private investment. In the solar power sector alone, the government is aiming to add a minimum of 5,000 megawatts in the next five years.

Akshay Jaitly
Akshay Jaitly

These policies will be valid for five years and all solar and wind power projects commissioned during this period will be covered by them (including projects which are currently under construction). The new policies also allow for migration from the old policies to the new policies for solar projects commissioned after 30 June 2014 and wind projects allotted but not yet commissioned.

Most of the benefits under these policies apply for 10 years from the date of commissioning and allow developers to sell power to the distribution licensees in Andhra Pradesh (AP discoms), captive consumers or third parties, located within or outside the state. However, the incentives offered vary depending on the power offtaker. If implemented in accordance with their terms, the new policies could de-risk development phase projects as they potentially provide for quick, time-bound and simplified processes to obtain consents and approvals, provide fiscal incentives and simplify the land acquisition process.

The policies seek to encourage investment in wind and solar projects by exempting them from paying various charges and duties. Projects set up under the new policies are also exempt from obtaining a no-objection certificate from the AP Pollution Control Board to set up and operate the projects.

The new policies also provide for time-bound disposal of grid connectivity and open access applications, both of which are critical to smooth, on-schedule commissioning of wind and solar power projects. The new policies mandate that grid connectivity applications must be processed within 14 days, and further provide that system strengthening, if required, should be done on a priority basis for projects set up under the new policies. More certainty and predictability has been brought to the open access application procedure as well, by providing for deemed open access if the open access applications are not processed within 21 days.

Other deeming provisions include deemed public-private partnership status for projects selling power to AP discoms, deemed non-agricultural status for land parcels acquired to set up the projects, and deemed “must run” status for the purposes of scheduling of power to the grid.

The New and Renewable Energy Development Corporation of Andhra Pradesh (NREDCAP) will be responsible for facilitating single-window clearances for wind and solar projects developed under the new policies. NREDCAP will facilitate capacity allocation, statutory clearances and coordination with central/state agencies. The policies provide that applications for approvals and clearances will be disposed of within 30 days from the date of registration of the project with NREDCAP.

Vishal Binod
Vishal Binod

To promote the establishment of wind and solar manufacturing facilities in the state, the policies provide for allotment of government land on a priority basis for wind and solar manufacturing facilities on a long-term lease. Such manufacturing units will be exempt from paying electricity duty for 10 years.

To promote solar rooftop projects in the state, the new policies provide for the installation of solar rooftop systems on public buildings, domestic, commericial and industrial establishments on a net or gross metering basis. The tariff for such projects will be the average power purchase cost of the AP discoms determined by the AP Electricity Regulatory Commission. Applications to set up rooftop solar projects will be processed online and the applications along with the requisite approvals and clearances will have to be disposed of by the relevant AP discom within 14 days.

The amendments brought about by the new policies fall under three categories: (1) reducing certain costs and charges currently payable to various statutory bodies; (2) setting out clear and short time frames to provide key approvals, with deeming provisions for applications not disposed of within a specified time period; (3) providing various other deemed approvals for renewable energy projects.

Significantly, the policies also allow solar parks within the state access to incentives provided by the central government under the National Solar Mission, a single-window clearance system from NREDCAP for land acquisition, and a provision for banking of 100% of energy for all captive and open access or scheduled consumers during all 12 months of the year.

If the AP government follows the terms of the new policies, developers should gain significant clarity and comfort on key issues which have in the past been causes for delay and uncertainty in developing renewable energy projects in the state and elsewhere in India.

Akshay Jaitly is a partner at Trilegal and Vishal Binod is an associate. Trilegal is a full-service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.

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Email: akshay.jaitly@trilegal.com

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