In 2014, the state of Andhra Pradesh was bifurcated to carve out the new state of Telangana. For Climatescope 2015, we have assessed both states as one – Andhra Pradesh – for uniform comparison with the previous year.
Of the total 20GW power-generating capacity on line in the state, 11GW is represented by coal. Renewables account for just 10% (2GW), mostly in the form of wind and biomass. The state’s wind potential is far from tapped. With just 912MW commissioned today, there is substantial room for new projects.
New state and political uncertainties are creating new challenges to project development, however. Some wind farms in Andhra Pradesh have existing power purchase agreements signed with firms located in what is now Telangana and are facing hiccups as charges for wheeling power across the state line have not fully been determined. In an attempt to at least partially compensate for this, the states have raised the limit of accelerated depreciation claims allowed by 15% which results in a larger tax benefits for developers.
After the bifurcation, both new states have set very ambitious plans for adding solar capacity to address an existing power deficit. Combined, Andhra Pradesh and Telangana had 243MW on line at year-end 2014, up 350% increase from 2013 levels. Each state conducted a 500MW auction in 2014 that generated strong responses from developers and among the lowest priced offers to deliver clean power in the country. This capacity is under development currently. Both Telanagan and Andra Pradesh have announced plans for a couple of GW solar auctions for 2015 including Telangana’s 2GW.
NTPC, India’s largest power generator, is seeking to develop 1.75GW of new solar capacity in the new Andhra Pradesh through various schemes.