APERC Gives In-Principle Nod for Procurement of 1,600 MW Thermal Power in Andhra Pradesh

In a major step towards strengthening Andhra Pradesh's long-term energy security, the Andhra Pradesh Electricity Regulatory Commission (APERC) has granted in-principle approval for the procurement of 1,600 MW of coal-based thermal power through a tariff-based competitive bidding process. The procurement will be undertaken by the state's electricity distribution companies ( DISCOMs) to meet the growing power demand and ensure reliable electricity supply in the coming years.

The procurement will be carried out under Section 63 of the Electricity Act, 2003, following the Design, Build, Finance, Own and Operate (DBFOO) model. Under this framework, the selected developer will design, finance, construct, own and operate the thermal power plant before supplying electricity to the state's DISCOMs under a long-term agreement.

In a statement issued on Friday, APERC said the bidding process would follow the standard Request for Qualification (RFQ), Request for Proposal (RFP) and Power Supply Agreement (PSA) documents prescribed by the Ministry of Power, ensuring transparency and equal participation for eligible developers across the country.

The project marks the first phase of Andhra Pradesh's long-term thermal capacity expansion plan. According to the Central Electricity Authority's (CEA) Resource Adequacy Plan, the state will require an additional 5,588 MW of coal-based generation capacity by 2035-36. The government has therefore decided to secure 1,600 MW in the initial phase.

The proposal was finalised following a review meeting chaired by Chief Minister N. Chandrababu Naidu on April 27, after which it received approval from the Andhra Pradesh Power Coordination Committee (APPCC) in June. APERC subsequently granted in-principle approval on August 6.

The commission observed that although Andhra Pradesh has significantly expanded solar and wind power generation, renewable energy output depends on weather conditions and may not be sufficient during evening peak demand or periods of low sunlight and wind. It said additional thermal capacity is essential to provide continuous grid support, improve reliability and meet peak electricity demand.

However, APERC clarified that the current approval is only for initiating the bidding process and does not constitute final approval for tariffs or power supply agreements. After completion of the bidding, the DISCOMs must submit the bid evaluation report, proposed tariff, draft PSAs and details of any deviations from the Centre's standard bidding documents for the commission's final approval.

The regulator also directed DISCOMs to reject bids that fail to deliver competitive, consumer-friendly tariffs. It further advised that the proposed power plants should preferably be connected to the Andhra Pradesh State Transmission System, though projects linked through the Inter-State Transmission System (ISTS) may also be considered if they can supply power to the state's border at a lower overall cost.

The Andhra Pradesh Power Procurement Cell is expected to issue the bidding documents shortly, after which the process will move through bid submission, tariff determination and regulatory scrutiny before long-term power supply contracts are finalised.