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The Andhra Pradesh Electricity Regulatory Commission (APERC) has approved the continuation of the power purchase agreement between the Southern Power Distribution Company of Andhra Pradesh Limited (APSPDCL) and the National Aluminium Company Limited (NALCO) for NALCO’s 50.4 MW wind power project located in Gandikota, YSR Kadapa district. The original PPA, signed in 2012, had expired on 29 December 2022. After negotiations, APSPDCL and NALCO signed a new agreement on 26 February 2024 for a period of 15 years. APSPDCL requested approval of this agreement at a tariff of ₹2.55 per unit with a 3% annual escalation, allowing NALCO to retain Renewable Energy Certificate (REC) benefits.
The Commission reviewed the petition and the objections raised by stakeholders. The objections argued that APSPDCL was not obligated to continue purchasing power after the PPA expired and questioned the necessity of buying expensive wind power, especially when APSPDCL had already exceeded its Renewable Power Purchase Obligations (RPPO). Concerns were also raised regarding a lack of transparency, fairness in tariff fixation, and unjustified benefits to NALCO, especially the continuation of RECs.
APSPDCL countered by citing the Ministry of Power’s directive to comply with a higher Renewable Consumption Obligation (RCO), which necessitates more renewable power procurement. The company defended the negotiated tariff as competitive and justified the 3% escalation due to rising costs. It also clarified that the original PPA had already allowed NALCO to retain REC benefits.
Following these deliberations, APERC analyzed the demand-supply projections and found that the power from NALCO’s project is needed to meet renewable targets, especially from FY 2027-28 onward, where a shortfall of over 12,000 MUs is expected. It also clarified that the project is not classified as “must-run,” so APSPDCL will not be forced to back down cheaper thermal power.
Regarding the REC benefits, the Commission ruled that the revised PPA must be amended to ensure that REC benefits do not accrue to NALCO. The rationale was that the earlier justification—high capital costs of wind projects—no longer applies, as the project likely recovered its costs. Allowing NALCO to continue benefiting from RECs would burden consumers and defeat the DISCOMs’ RPPO compliance.
On the tariff matter, the Commission noted APSPDCL failed to justify the proposed rate. After conducting its assessment using Central Electricity Regulatory Commission (CERC) guidelines, the Commission determined a levelized tariff of ₹2.49 per unit for 15 years, instead of the proposed ₹2.99 per unit resulting from the original escalation model. The revised tariff is effective from 1 August 2025.
Finally, APSPDCL is required to submit the amended PPA reflecting these changes within 30 days for final approval. The order also specifies that APSPDCL will have the first right of refusal for power beyond the 15-year period and that Certified Emission Reduction (CDM) benefits are to be shared 90:10 between the developer and DISCOM.
