Bengaluru: The Andhra Pradesh government has directed state-run power distribution companies to honour contracts signed with renewable energy developers, offering relief to generators at a time when several clean energy buyers are backing out of agreements and seeking lower tariffs.

Andhra Pradesh, one of the leading states in using renewable energy, has more than 7,000 MW of solar and wind projects and aims to take it to 18,000 MW by 2021-22.

In a letter to distribution companies (discoms) on March 15, the state’s principal secretary for energy said, “It has come to the notice of the MNRE (ministry of new and renewable energy) that some of the State Electricity Regulatory Commissions (SERCs) are not according consent for wind power projects which were commissioned before March 31, 2017, and for which power purchase agreements (PPAs) have already been signed. This creates an atmosphere of uncertainty in wind power sector and going back on contractual documents like PPAs may not be appropriate.” ET has seen a copy of the letter.

Tariffs have dropped sharply at wind project auctions over the last two years, and discoms that had signed PPAs earlier are now seeking renegotiation to lock in lower rates.