Maharashtra DISCOM to Amend EPAs for Purchase of 500 MW of Wind Power

The MSEDCL had requested the commission to approve the deviations sought in the EPAs

July 9, 2019


The Maharashtra State Electricity Distribution Company Limited (MSEDCL) has received the approval it sought from the Maharashtra Electricity Regulatory Commission (MERC) for deviations in the standard bidding document for the long-term procurement of 500 MW of wind power.

The approval was sought for wind projects for which the energy purchase agreements (EPAs) had expired or are about to expire in FY 2019-20.

The MSEDCL has sought the approval for admitting its petition as per the provisions of Regulation 19 of MERC (Renewable Purchase Obligation (RPO), Its Compliance and Implementation of REC Framework) Regulations, 2016.

According to the standard bidding guidelines issued by the Ministry of Power (MoP) in 2017, the MSEDCL can propose the deviations to the commission, and after due approval, the DISCOM can implement them for the fulfillment of its RPO.

In a similar case earlier this year, the state commission had directed MSEDCL to procure wind power through the competitive bidding route from wind power projects whose EPAs with MSEDCL had expired. In that order, the commission had mentioned that as the wind generators had their EPAs with MSEDCL for past several years and their projects were already commissioned, MSEDCL may take appropriate deviations, from provisions of the competitive bidding guidelines with prior approval of the commission. The rate discovered in the bidding process would be dealt with by the MERC during the tariff adoption process for meeting the requirement of fulfilling its non-solar RPO.

At present, there is a shortfall in the achievement of non-solar RPO targets, and after the expiry of the existing EPAs, it would have a further shortfall in meeting its non-solar target. This will require the procurement of additional non-solar renewable energy certificates (RECs).

The MSEDCL is facing a dual problem. On the one hand, due to inadequate quantities of RECs available in the market, RECs are being traded at rates much higher than the floor prices. On the other hand, wind generators are trying to sell power through open access to bulk consumers of MSEDCL and Mumbai utilities.

With the increasing targets of RPOs, it was required for the MSEDCL to contract enough non-solar power through long-term contracts.  Earlier, it had attempted to procure wind power through a competitive bidding process at the ceiling rate of ₹1.97 ($ 0.02)/kWh, but no response was received from the bidders.

Later, the MSEDCL decided to conduct the bidding process for the procurement of 500 MW of power from wind generators with a ceiling tariff of  ₹2.52 ($0.036)/kWh for the period of available useful life or eight years for those whose EPAs have expired or are going to expire in FY 2019-20.

According to the details of these wind generators, the minimum capacity of a wind project is 0.6 MW. Considering this, the MSEDCL had sought the deviation in bidding document to reduce the minimum installed capacity of a project from 5 MW to 0.5 MW and the minimum bid capacity from 25 MW to 0.5 MW. Considering the details submitted by MSEDCL in the list of generators which includes 70 projects each of 0.6 MW, the commission allowed the deviation sought by the MSEDCL.

It also proposed the relaxation of Performance Bank Guarantee and financial closure citing the reason that the projects are already commissioned. Consequently, the commission agreed to the change.

Moreover, the state DISCOM also stated that since the projects are old and using outdated technology, it is likely that their Capacity Utilization Factor (CUF) would be lesser than the mandated 22%. This request was also accepted by the commission.

On the issue of repowering, it had sought a deviation from the ministry guideline by suggesting that a maximum six-month cumulative period for repowering of projects should be allowed in the PPA. The commission noted that the proposed change not only gives more clarity about repowering of wind generators but also may result in a higher generation, which is in the interest of the consumers. Stating this, the commission granted this deviation as well.

 A few months ago, the state commission pulled up MSEDCL for the continued delay in meeting payment obligations to independent power producers, including delayed payment charge, and for disregarding the previous orders of the commission.

Image credit: ENERGY.GOV [Public domain]