State to procure 1,600 MW thermal power through competitive bidding

Metro India News | AMARAVATI

Andhra Pradesh will procure 1,600 MW of coal-based thermal power through a competitive bidding process to meet rising electricity demand and strengthen long-term energy security after aa state regulatory commission granted in-principle approval for the proposal. The power will be procured by the state's distribution companies through Tariff-Based Competitive Bidding (TBCB) under Section 63 of the Electricity Act, 2003, using the Design, Build, Finance, Own and Operate (DBFOO) model.

"The procurement of 1,600 MW of thermal power has been approved in-principle to meet the state's growing electricity demand through a transparent competitive bidding process under the DBFOO model," Andhra Pradesh Electricity Regulatory Commission (APERC) said in a press release. The bidding process will be conducted on the basis of the standard Request for Qualification (RfQ), Request for Proposal (RfP) and Power Supply Agreement (PSA) documents notified by the Union Ministry of Power.

The proposed procurement marks the first phase of Andhra Pradesh's long-term thermal capacity addition programme. According to the Central Electricity Authority's Resource Adequacy Plan, the state will require around 5,588 MW of additional coal-based thermal generation capacity by 2035-36, of which 1,600 MW will be procured initially. The proposal was initiated following a review meeting chaired by Chief Minister N Chandrababu Naidu on April 27, after which the Andhra Pradesh Power Coordination Committee (APPCC) approved it at its meeting in June. APERC granted in-principle approval on August 6.

The additional thermal capacity is expected to provide firm, dispatchable power to support the grid during periods of high demand and when renewable energy generation from wind and solar is low. It will complement the state's expanding renewable energy portfolio by ensuring round-the-clock electricity availability during evening peaks and seasonal fluctuations.

The regulator clarified that its approval is limited to commencement of the bidding process and does not amount to approval of the tariff or the PSAs. After completion of the bidding, the distribution companies must submit the bid evaluation report, discovered tariff, draft PSAs and details of any deviations from the Centre's standard bidding documents for regulatory approval.

APERC directed the distribution companies to reject bids if the discovered tariffs are not competitive, saying the procurement should ensure cost-effective power for consumers. The commission also directed that the proposed generating capacity should preferably be connected to the Andhra Pradesh State Transmission Network to optimise transmission infrastructure and minimise delays. However, projects connected through the Inter-State Transmission System (ISTS) may also be considered if the landed cost of power at the Andhra Pradesh boundary is lower.

Under the DBFOO model, the selected developer will be responsible for designing, constructing, financing, owning and operating the power plant while supplying electricity to the state's distribution companies under long-term agreements. The Andhra Pradesh Power Procurement Cell is expected to issue the bidding documents shortly, following which the process will move to bid submission, tariff discovery and final regulatory scrutiny.