Small power projects are integral to application of appropriate technology and economic development. Because of the critical role of electric power in economic development, these small power development experiences are the cornerstone of locally based bottom-up development strategies. The experience to date has not been collected or analyzed.

The Asia Alternative Energy Program, under the UNDP RAS contract, is evaluating the experience with independent small power projects (SPP) in five Asian countries (including two states- Andhra Pradesh and Tamil Nadu in India) that have SPPs in effect. Particular emphasis is devoted to evaluating the Power Purchase Agreements. PPAs that embody the legal obligations of the SPP and power purchaser, as PPAs are core legal documents for SPP development.

The Energy & Alternative Energy Division of International Resources Group (IRG), USA engaged Winrock International India for rendering services for Local In-Country Consultancy in support of Competitive Analysis of Small Power Projects (SPP).

Specific project activities included the following:

• Research the history of SPP development in the target areas of Andhra Pradesh/Tamil Nadu and obtain information on implementation of SPP projects in the prescribed format
• Study the impact of the power sector restructuring at the state level with particular emphasis on Andhra Pradesh.
• Provide copies of: PPAs that have been used or proposed to be used for embodying the legal relationship between SPPs and the local utility, interconnection agreements and any regulations, statutes
• Identify the stakeholders in this process to whom the Legal Consultant could interact with in Andhra Pradesh/Tamil Nadu. The stakeholders are SPP lenders, attorneys, ministries/government officials involved in PPAs, and state utility personnel involved in designing and implementing PPAs.

The project facilitated the understanding of various activities involved in the SPP development, planning, implementation, power purchase agreements, regulations and the impact of power sector restructuring on PPAs.