The Andhra Pradesh government is not altogether unjustified in wanting to review and re-negotiate the PPA contracts for wind and solar power. After all, while the tariffs negotiated in 2014-18 were between `4.7 and `4.8 per unit, the rates at which renewables projects are being signed today are much lower. Whether or not the tariffs were gold-plated, as has been suggested, is not known. But it would not hurt to review them because it is abundantly clear the AP government can’t afford them.
Worse, as the state has argued, it needs to continue paying the fixed charge for thermal power even if doesn’t draw the power; this hikes the cost of renewable power even more. Indeed, wind and solar power producers in the state are receiving their payments 8-10 months late. Under the circumstances, the state has been forced to draw less power from wind farms and take the drastic step of serving producers a notice.
