The Andhra Pradesh government’s demand for a waiver of transmission fees has put the Adani Green Energy’s deal to supply solar power to the state’s distribution companies in jeopardy. In 2019, Adani Green Energy won a tender to supply 600 MW of solar power to the Andhra Pradesh Power Distribution Companies (DISCOMs) at a tariff of ₹2.58 per unit. However, the state government has now asked the Central Electricity Regulatory Commission (CERC) to waive the transmission fees payable to Power Grid Corporation of India, which is around ₹0.25 per unit.
Adani Green Energy has objected to this demand, stating that it was not a party to the agreement between the state government and Power Grid Corporation. The company has argued that the transmission fees are a pass-through cost and should be borne by the DISCOMs. The CERC has agreed to hear the matter, but Adani Green Energy has warned that if the transmission fees are waived, it would lead to a significant loss for the company.
The Andhra Pradesh government’s demand for a waiver of transmission fees is part of its efforts to reduce the financial burden on the state’s power distribution companies. The state’s DISCOMs are facing significant financial stress due to the high cost of power purchases and transmission fees. The government has argued that the waiver of transmission fees would help reduce the cost of power purchases and make electricity more affordable for consumers.
However, the Adani Green Energy deal is not the only one that is affected by the Andhra Pradesh government’s demand. Several other renewable energy projects in the state are also facing similar issues. The industry has warned that if the transmission fees are waived, it could lead to a loss of investor confidence in the sector. The renewable energy sector is already facing significant challenges, including a slowdown in new project additions and a lack of clarity on policy and regulatory issues.
The CERC’s decision on the matter is likely to have significant implications for the renewable energy sector in Andhra Pradesh. If the transmission fees are waived, it could lead to a reduction in the cost of power purchases for the state’s DISCOMs, but it could also lead to a loss of revenue for Power Grid Corporation and other transmission companies. The decision could also set a precedent for other states to demand similar waivers, which could have far-reaching implications for the sector.