What Am I

In continuation with my previous blog on the catch-22 situation of renewable energy companies in Andhra Pradesh, India, a probable radical solution as detailed below, may be explored by the Government of Andhra Pradesh. Renewable plants boast about their ability to serve the green agenda but are still dependent on subsidies and one of the subsidy being offered to them is the "must run" category. What if this "Must run" category is revoked. None of the plants would fall in the Merit Order Despatchability Curve and scheduling them will only be subject to the discretions of the DISCOM. While this would definitely send a wrong signal to the investors, but DISCOMs are unable to make good of any pending payments, and hence they might as well explore a legal way to get around.  And what happens when the MUST RUN category is revoked. There is no fixed/variable price component difference in Solar/Wind. 95% is a fixed cost component. Hence, technically the

This is in the context of the recent attempts of Andhra Pradesh state Government, in India to renegotiate the PPAs of existing Solar/Wind assets. To give you a brief context, the previous Government encouraged renewable power installations in an attempt to encourage green power generation in the state inspite of the government's financial conditions in not such a great condition. The new Govt., came and alleges that the contracts with those renewable assets would be renegotiated as the Govt. cannot afford payments to those companies and also that the contracts were awarded only to a few companies that had alleged relationship with members of the previous regime. AP govt has been insisting upon renegotiating the PPAs that have been signed as it is unable to honour the high cost contracts, inspite of the recommendation from govt of India to not do so. Is there any merit in the approach by AP. Before we get into further analysis, if we take a peek into the ground reality