The Maharashtra Electricity Regulatory Commission (MERC) has approved the tariff of ₹2.90 (~$0.035)/kWh for procuring 500 MW of solar power on a long-term basis from projects developed within the state.

The Commission allowed the Maharashtra State Electricity Distribution Company (MSEDCL) to enter into a power purchase agreement with the successful bidder for 25 years.

Additionally, the state regulatory authority instructed the state transmission utility (STU) to collaborate with the distribution companies (DISCOMs) to devise a ten-year power procurement plan and submit it to improve the transmission capacity. This step aims to prevent the need for exclusively resorting to intrastate tenders.

The solar power procured from the projects will be eligible for fulfilling the renewable purchase obligation (RPO) targets of MSEDCL.

MSEDCL had filed a petition seeking the adoption of a tariff for the long-term procurement of 500 MW of power from intrastate grid-connected solar power projects.

Background

MSEDCL had floated a tender on September 30, 2022, for procuring 500 MW of solar power from intrastate grid-connected solar power projects (Phase IX).

In the e-reverse auction carried out by MSEDCL, Taletuttayi Solar Projects Eight (SolarArise), SJVN Green Energy, and Tata Power Renewable Energy were declared the winners.

SolarArise quoted ₹2.90 (~$0.035)/kWh and won the capacity of 100 MW, followed by SJVN Green Energy which won 200 MW by quoting a price of ₹2.95 (~$0.036)/kWh. Although Tata Power Renewable Energy bid 300 MW, it was allocated 200 MW after quoting ₹2.97 (~$0.0364)/kWh under the bucket-filling method.

Considering the discovery of higher rates in the range of ₹2.90 (~$0.035)/kWh to ₹2.97 (~$0.036)/kWh as compared to MSEDCL’s discovered tariffs in August last year, i.e., ₹2.90 (~$0.035)/kWh and ₹2.91 (~$0.035)/kWh, the successful bidders with a quoted tariff higher than ₹2.90 (~$0.035)/kWh were called for the discussion in December-2022. MSEDCL requested the parties to match with the L1 discovered tariff.

Initially, SJVN and Tata Power Renewable Energy did not respond.

The DISCOM again followed up in January 2023 for negotiations, and then both Tata Power and SJVN agreed to match the tariff of ₹2.90 (~$0.035)/kWh. Hence, the final rate discovered for the tender was ₹2.90 (~$0.035)/kWh.

Commission’s analysis

MERC acknowledged that MSEDCL had emphasized the absence of any remaining margin in the transmission capacity of the transmission lines connecting the Maharashtra transmission system to the national grid.

As a result, DISCOM initiated the tender for projects within the state. The Commission stated that while the interstate transmission constraint could potentially affect the pricing of solar procurement negatively, it was important to acknowledge the existence of transmission constraints and recognize the valid reasoning behind the intrastate procurement.

The Commission observed that MSEDCL had conducted a transparent process of bidding which was in accordance with the guidelines notified by the Government of India.

Also, the regulator added that the discovered tariff of ₹2.90 (~$0.035)/kWh was in line with the earlier adopted tariffs.

Accordingly, MERC adopted the tariff of ₹2.90 (~$0.035)/kWh for 500 MW of solar power procurement on a long-term basis.

Last year, MERC allowed MSEDCL to adopt the tariff discovered through a competitive bidding process for procuring power from 500 MW of grid-connected solar projects.

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