Maharashtra’s New 500 MW Solar Tender Comes With a Tariff Cap of ₹2.90/kWh

The deadline for the submission of bids is November 30, 2019


The Maharashtra State Electricity Distribution Company Limited (MSEDCL) has issued a Request for Selection (RfS) for the long-term procurement of power from 500 MW of intra-state solar power projects (Phase-IV).

The deadline for the submission of bids is November 30, 2019. The MSEDCL has set the ceiling tariff of ₹2.90 (~$0.041)/kWh for this tender.

For this tender, the prospective bidders must pay ₹500,000 (~$7,083.39)/MW as the earnest money deposit (EMD) to participate in this tender. The bidders selected would also need to submit the performance bank guarantee of ₹1.4 million (~$19,833)/MW.

The scope of work includes setting up the projects including the transmission and distribution network up to the delivery point. All approvals, permits, and clearances required for setting up of the project (including connectivity) will be the responsibility of the successful bidder. The minimum project capacity will be 5 MW at a single location while the minimum bid capacity has been set at 50 MW.

The selection of projects would be technology agnostic within PV technology and crystalline silicon or thin film (with or without trackers) can be installed.

As far as the eligibility criteria are concerned, the net worth of the bidder for the financial year ending on March 31, 2019, should not be less than ₹5.5 million ($78,057).

Interested bidders must identify 100% of the land required for the project at the time of the submission of the bid.

However, successful bidders will be allowed to change the location of the project within the state at the time of achievement of the financial closure, which is within nine months from the date of execution of the power purchase agreement (PPA), for projects being set up in solar parks and within 12 months from the date of execution of the PPA, for projects being set up outside.

In August 2019, the Maharashtra State Electricity Distribution Company Limited (MSEDCL) had issued a tender to procure 500 MW of solar power. The state DISCOM had then set the tariff ceiling at ₹2.80 ($0.038)/kWh. However, according to a state official, that project has been canceled due to bidders not being clear about the transmission charges.

Before this tender, Maharashtra had floated a tender for the long-term procurement of 1 GW of solar power to meet its RPO in June 2019. The ceiling tariff for that tender was also set at ₹2.80 ($0.038)/kWh.

Tariff caps in reverse auctions have been a major problem for the sector as developers are very reluctant to participate in auctions where tariffs can only go in the downward direction.

The Maharashtra Electricity Regulatory Commission has been reluctant to approve tariffs above ₹3 ($0.040)/kWh. Earlier this month, the commission dismissed a petition filed by MSEDCL seeking the approval of tariff for 1,170 MW of solar projects to be set up under the Mukhyamantri Saur Krishi Vahini Yojana. The MSEDCL in its petition had requested for the adoption of tariff in the range of ₹3.16 (~$0.045)/kWh to ₹3.30 (~$0.046)/kWh. The tariffs were discovered in the competitive bidding process for a cumulative capacity of 1,170 MW of solar power projects in order to meet the DISCOM’s solar RPO.

Image credit: juwi