Maharashtra Releases Draft Regulation for Tariff Determination of Renewable Projects

MERC has published the capital costs, O&M expenses, and CUF limits for renewable energy projects in the state

October 30, 2019


The Maharashtra Electricity Regulatory Commission (MERC) has issued the draft version for its tariff determination regulation order for renewable projects that are commissioned in the state for the generation and sale of electricity to distribution licensees in Maharashtra.

The regulations cover all renewable energy projects commissioned in Maharashtra for the generation and sale of electricity to the distribution companies. The power projects that are covered under the rule include solar, wind, biomass, hybrid renewable energy power projects, and non-fossil fuel-based co-generation.

According to the regulations, the project-specific tariff for the generation of electricity from these renewable sources should follow the ceiling norms.

In the draft, MERC has specified 25 years as the useful life of wind power projects, while 20 years has been set as the useful life of biomass power projects and non-fossil fuel-based co-generation projects, 35 years for small hydro projects, and 25 years for solar projects.

The commission has set the minimum capacity utilization factor (CUF) for small hydropower projects at 30% for the purpose of tariff determination. For wind and rooftop solar energy projects, the MERC has set CUFs at 22% and 19%, respectively. For solar thermal projects, CUF has been set to 23%. The plant load factor (PLF) for biomass projects has been established at 60% to 80%, depending on the year after commissioning.

For tariff determination, the normative capital cost of a rooftop solar project will be considered as ₹40 million (~$565,200)/MW for the base year. The commission has established operation and maintenance costs for wind energy projects at ₹772,000 (~$10,000)/MW, ₹1.5 million ($21,000)/MW for solar thermal projects, and ₹600,000 ($8,478)/MW for rooftop solar projects.

Earlier this year, the state set the generic tariff for solar projects at ₹3.29 (~$0.047)/kWh for FY 2019-20. Moreover, the commission fixed ₹3.79 (~$0.054)/kWh as the generic tariff for rooftop solar projects. This tariff will not apply to rooftop solar projects covered under the MERC regulations for net metering.

Maharashtra was the third state after Bihar and Tamil Nadu to issue ‘Renewable Energy Tariff Order’ in April 2019.

In March 2019, the Central Electricity Regulatory Commission (CERC) had announced the generic tariffs for the purchase of electricity from a host of renewable energy generation sources for FY 2019-20.

Image credit: Grandridge wind solar

Shaurya is a staff reporter at with experience working in the Indian solar energy industry for the past four years in various roles. Prior to joining Mercom, Shaurya worked with a renewable energy developer and a consulting company. Shaurya holds a Bachelors Degree in Business Management from Lancaster University in the United Kingdom.