APERC Approives 1.16 GW Solar Procurement at ₹3.09/kWh: A Defining Moment for Agricultural Solar Power in Andhra Pradesh

India’s renewable energy transition has moved far beyond ambitious targets and headline capacity numbers. The real challenge today lies in execution — delivering affordable, reliable clean power while maintaining grid stability and protecting financially stressed electricity distribution companies. Against this backdrop, the recent approval by the Andhra Pradesh Electricity Regulatory Commission (APERC) for the procurement of 1.16 GW of solar power at a tariff cap of ₹3.09 per kWh stands out as a decisive and carefully balanced regulatory intervention.

This decision is significant not only because of the scale of capacity involved, but also because of where and how this solar power will be used. Unlike many earlier projects that fed power into the general grid, this procurement is designed specifically to solarise agricultural feeders under the PM-KUSUM programme. In doing so, APERC has addressed multiple long-standing issues at once — unreliable farm power supply, rising subsidy burdens, stressed DISCOM finances, and the need for decentralised renewable energy.

The APERC 1.16 GW solar procurement approval reflects how India’s power sector is maturing. Regulators are no longer approving renewable projects simply to increase capacity. Instead, decisions are increasingly shaped by cost realism, system efficiency, and long-term sustainability. This article explores the approval in detail — what it means, why the ₹3.09/kWh tariff matters, and how it could influence the future of solar power in Andhra Pradesh and beyond.

Why the APERC 1.16 GW Solar Procurement Decision Matters

At first glance, 1.16 GW may appear to be just another addition to India’s rapidly growing solar portfolio. However, the context makes this procurement fundamentally different.

The approved capacity of 1,162.8 MW will be used for feeder-level solarisation of agricultural loads. Agriculture remains one of the most electricity-intensive sectors in India, yet it contributes very little direct revenue to DISCOMs due to heavy subsidies or free power policies. As a result, farm power has long been one of the biggest financial pressure points for state utilities.

By approving solar procurement specifically for agricultural feeders, APERC is effectively converting a cost centre into a predictable, long-term energy solution. Solar power generated locally and supplied directly to farm feeders reduces dependence on conventional power sources, cuts losses, and limits subsidy exposure.

The development was first reported by Mercom India, and it quickly drew attention across the renewable energy industry due to its scale and tariff discipline.

Understanding the Role of APERC in Andhra Pradesh’s Power Sector

The Andhra Pradesh Electricity Regulatory Commission plays a critical role in shaping the state’s electricity ecosystem. Beyond tariff setting, APERC evaluates power procurement proposals, reviews cost assumptions, and ensures that long-term contracts align with consumer interests.

Andhra Pradesh has a complex power sector history. The state emerged as a major solar destination during the early growth years of India’s renewable energy push, but it also experienced periods of policy uncertainty that affected investor confidence. In recent years, APERC has taken a more structured and data-driven approach to approvals, focusing on transparency and cost alignment.

The approval of the APERC 1.16 GW solar procurement reflects this regulatory maturity. Rather than simply endorsing the tariffs discovered through bidding, the commission undertook a detailed assessment of project costs, taxation changes, and broader market trends before finalising the tariff cap.

The Significance of the ₹3.09/kWh Tariff Cap

The most closely watched element of the approval is the tariff ceiling of ₹3.09 per kWh. This figure is neither arbitrary nor purely market-driven. It represents a carefully considered balance between affordability for DISCOMs and commercial viability for developers.

During the initial bidding and negotiation process, tariffs slightly above this level were discovered. However, APERC intervened after examining several cost-related developments, particularly the reduction in GST on renewable energy components and the overall decline in solar module prices.

The commission concluded that allowing higher tariffs would place unnecessary financial strain on DISCOMs and, by extension, electricity consumers. At the same time, APERC avoided pushing tariffs to unsustainable levels that could discourage serious developers or compromise project quality.

Importantly, APERC also introduced flexibility by allowing developers to seek limited tariff adjustments if they could demonstrate that substantial project costs were incurred before tax changes took effect. This provision ensured fairness while maintaining overall tariff discipline.

PM-KUSUM and the Strategic Importance of Feeder Solarisation

The APERC 1.16 GW solar procurement is closely aligned with the objectives of PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan), one of India’s most ambitious decentralised renewable energy initiatives.

PM-KUSUM aims to transform how energy is supplied to agriculture by promoting:

• Solar pumps
• Standalone off-grid systems
• Solarisation of existing agricultural feeders

Component-C of the scheme, under which this procurement falls, focuses on grid-connected solar plants supplying power directly to farm feeders. This approach has several structural advantages over traditional grid supply.

Instead of transmitting electricity over long distances from centralised power plants, feeder-level solar generation supplies power closer to the point of consumption. This reduces technical losses, improves voltage stability, and ensures better matching between generation and demand.

For Andhra Pradesh, where agriculture remains a major economic activity, feeder solarisation represents a structural improvement rather than a temporary fix.

Impact on Farmers: Reliable Daytime Power and Reduced Uncertainty

For farmers, the benefits of the APERC 1.16 GW solar procurement are tangible and immediate.

Agricultural power supply in many parts of India has historically been provided during night hours to manage grid load. This practice creates operational challenges for farmers, increases safety risks, and limits flexibility in irrigation planning.

Solarised feeders change this equation. By supplying power during daylight hours, farmers gain greater control over irrigation schedules, reduce dependence on diesel pumps, and improve crop management. Over time, this can lead to higher productivity and lower operating costs.

Although farmers may not directly see tariff numbers, the reliability and predictability of supply have a significant economic impact. In this sense, the APERC approval supports rural livelihoods alongside clean energy goals.

Financial Relief for DISCOMs

Andhra Pradesh’s distribution companies have long struggled with balancing affordable tariffs and rising power procurement costs. Agricultural subsidies, in particular, have been a persistent drain on DISCOM finances.

The APERC 1.16 GW solar procurement offers a pathway to stabilisation. Solar power procured at ₹3.09/kWh provides long-term price certainty, shielding DISCOMs from fuel price volatility and escalating thermal power costs.

Additionally, feeder-level solarisation reduces technical losses and peak demand pressure. These efficiency gains translate into measurable financial savings over time.

From a regulatory perspective, this approval also helps DISCOMs meet renewable purchase obligations without resorting to expensive short-term power procurement.

What the Decision Means for Solar Developers

For solar developers, the approval represents both opportunity and challenge.

On the opportunity side, the scale of procurement creates a strong project pipeline with long-term power purchase agreements backed by state utilities. Regulatory clarity from APERC reduces policy risk, which is a critical factor for investors and lenders.

However, the ₹3.09/kWh tariff cap leaves little margin for inefficiency. Developers must optimise every aspect of project development — from land acquisition and engineering design to financing and operations. Access to low-cost capital and efficient supply chains will be key differentiators.

This environment favours experienced players with strong execution capabilities rather than speculative entrants. In that sense, the APERC decision could contribute to a more stable and professional solar market.

Comparison with Solar Tariffs Across India

The tariff approved by APERC aligns closely with benchmarks observed in other states implementing PM-KUSUM and similar schemes.

States such as Rajasthan and Uttar Pradesh have approved feeder solarisation projects with tariffs in the ₹3.00–₹3.15/kWh range. This convergence suggests that India’s solar sector has reached a level of cost maturity where regional variations are narrowing.

By approving a tariff within this range, APERC has ensured that Andhra Pradesh remains competitive while avoiding excessive downward pressure that could compromise project quality.

Grid Stability and System-Level Benefits

Beyond cost considerations, feeder solarisation offers significant technical advantages for the power system.

Local generation reduces congestion on transmission networks, improves voltage regulation, and lowers the risk of large-scale outages. Solar power supplied during daytime aligns well with agricultural load patterns, reducing the need for costly load management interventions.

APERC’s approval implicitly recognises these system-level benefits, reinforcing the idea that renewable energy must be integrated thoughtfully rather than added indiscriminately.

Risks and Challenges Ahead

While the APERC 1.16 GW solar procurement decision is forward-looking, it is not without challenges.

Land availability near agricultural feeders, financing constraints under tight tariffs, and execution timelines could pose risks. Delays in project commissioning could affect farmers and DISCOM planning.

However, APERC has built safeguards into the approval process, including monitoring mechanisms and cost verification requirements. These measures reduce the likelihood of project failure while maintaining accountability.

Long-Term Implications for India’s Renewable Energy Transition

The broader significance of this approval lies in what it signals about India’s renewable energy trajectory.

As India moves towards its long-term clean energy targets, decentralised generation models like feeder solarisation will become increasingly important. They align renewable energy deployment with real-world demand patterns rather than abstract capacity goals.

The APERC 1.16 GW solar procurement demonstrates how regulatory discipline, cost realism, and policy alignment can work together to deliver sustainable outcomes.

Conclusion: A Pragmatic and Forward-Looking Regulatory Decision

The approval of 1.16 GW solar procurement at ₹3.09/kWh by APERC marks a defining moment for Andhra Pradesh’s power sector. It addresses agricultural power challenges, supports DISCOM financial health, and reinforces India’s commitment to decentralised renewable energy.

By balancing affordability with viability, APERC has set a strong precedent for other states to follow. The decision shows that clean energy transitions succeed not through aggressive targets alone, but through careful integration of policy, economics, and ground-level realities.

As feeder solarisation expands and similar models are adopted nationwide, decisions like this will shape not just how much solar power India installs, but how effectively it serves people, farms, and the grid.

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