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HC stays order slashing tariffs of incentivised wind power generators

NEW DELHI: The Andhra Pradesh High Court has stayed the state regulator’s order that reduced tariffs of electricity supplied by wind projects that received generation-based incentive (GBI) from the Centre.

The order is significant because the GBI issue was seen as a roadblock in Greenko’s planned acquisition of Orange’s renewable energy portfolio, as reported by ET on Aug 21.

The central government devised the GBI scheme to encourage investments in wind power generation by providing an additional incentive of Rs 0.50 for every unit of energy actually generated by a generator over and above the tariff granted by the regulator.

The incentive is a means to encourage pure-play power generation.

The order of the Andhra Pradesh Electricity Regulatory Commission (APERC) was challenged by leading clean energy players including Orange Renewables and Hero Group earlier this week, seeking an interim suspension of the APERC order. The order had been challenged primarily on the ground that APERC does not have the jurisdiction to alter its own orders subsequently.

The APERC had passed the order modifying its earlier tariff orders on the ground that it had earlier failed to give effect to its regulations that require incentives to be deducted from tariff. “Prima facie, the 1st respondent- Commission has no jurisdiction to exercise the power of review in the manner it did,” the court said in its order, a copy of which, has been reviewed by ET.

With around 2,000 MW wind project capacity in the state, the APERC order had an impact of more than Rs 2,000 crore for the wind generators in the state of Andhra Pradesh who had factored in the GBI while working out financials for setting up projects.

The high court order issued on late evening on Thursday comes as a big relief for wind generators in the state.

“Wind generators in the state had been denied GBI for over two years. This should bring clarity for regulators and help them make the sector more sustainable,” said an executive of an IPP, requesting not to be quoted.

Currently, other states like Gujarat, Rajasthan, Maharashtra and Karnataka having high concentration of wind power generation allow the benefit of GBI to the generators. The APERC order would have had the potential of bringing in similar approach in other states.