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India risks renewables growth halt if state bins PPAs: minister

RK Singh says Andhra Pradesh move to renegotiate PPAs would be illegal and chill investment in wind and solar

India’s renewable energy minister told one of its key wind and solar states it would be “wrong and against the law” to revise previously-signed power deals with projects, warning of a chilling effect on investment in the country.

RK Singh told the recently-elected state government of Andhra Pradesh: “If the impression goes out that the rule of law does not prevail or that contracts are not honoured, then investments will dry up and growth come to a halt,” Indian media reported.

Singh’s intervention in a letter to Andhra Pradesh’s chief minister came after the new administration there claimed “exorbitantly priced” wind and solar power purchase agreements (PPAs) signed under its predecessor were behind a “financial crisis” facing the state’s power distributors, which it said are facing liabilities of 200bn rupees ($2.9bn).

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The state ordered the establishment of a committee to “review, negotiate and bring down” the PPA rates within 45 days.

Singh told the state that “the renewable energy sector has brought a lot of foreign investment. Almost all the major pension funds of the world are invested in India through renewable energy companies.”

The power minister said “it would be wrong and against the law to cancel all the PPAs. The appropriate course would be that action for the reopening and cancelling a contract is only taken in those cases where a prima facie case of corruption is made out based on objective evidence,” reported The Economic Times.

Andhra Pradesh, in India’s southeast, has 4.1GW of wind and 2.6GW of solar in place, according to latest government data, with about 2GW in or nearing construction.

India badly needs foreign investment to help it meet some of the world’s most ambitious wind and solar targets.

Renewables developers – which have so far maintained a diplomatic silence – are understood to have been summoned to a meeting with Andhra Pradesh officials next week to discuss renegotiations.

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