The Maharashtra Electricity Regulatory Commission (MERC) has allowed Maharashtra State Electricity Distribution Company (MSEDCL) to proceed with competitive bidding for the procurement of 2,269 MW of distributed solar power under the Mukhyamantri Saur Krushi Vahini Yojana (MSKVY) 2.0 program.

The Commission also approved deviations proposed in the bidding documents, including delinking the tender from the central financial assistance available under the PM-KUSUM Component C program and introducing a ceiling tariff of ₹2.90 (~$0.031)/kWh.

MERC clarified that the competitiveness of tariffs discovered through the bidding process will be examined separately at the stage of tariff adoption.

Background

MSEDCL filed the petition seeking regulatory approval to initiate competitive bidding for the long-term procurement of solar power to meet its renewable purchase obligations (RPO) and supply daytime electricity to agricultural consumers across Maharashtra.

The procurement is part of the MSKYV 2.0, a state government initiative aimed at solarizing agricultural feeders by installing distributed solar projects near substations. Under the program framework, developers injecting electricity at the 11 kV or 22 kV busbar are eligible for an incentive of ₹0.25 (~$0.002)/kWh for three years if at least 75% of the contracted capacity is commissioned before the scheduled commercial operation date.

MSEDCL also referred to earlier regulatory approvals under the program. In August 2023, MERC approved initiating competitive bidding for 7,000 MW of distributed solar capacity.

Subsequent orders adopted tariffs discovered through competitive bidding for 7,783 MW of solar power, ranging from ₹2.90 (~$0.031)/kWh to ₹3.10 (~$0.033)/kWh.

The Commission also permitted additional procurement of 5,991 MW and later adopted tariffs for 5,008 MW of capacity, with bids ranging between ₹2.82 (~$0.030)/kWh and ₹3.10 (~$0.033)/kWh.

MSEDCL told the Commission that several policy developments at the national level had influenced the present petition.

The Ministry of New and Renewable Energy issued memorandums regarding the Approved List of Models and Manufacturers (ALMM) for solar modules and cells. While solar modules must be sourced from manufacturers listed in ALMM List I, projects with bid submission deadlines on or before August 31, 2025, were exempt from the requirement to source solar cells from ALMM List II.

According to MSEDCL, developers had raised concerns about delays in the availability of domestically manufactured modules meeting domestic content requirements (DCR). The widening price difference between DCR-compliant and non-DCR modules had increased project costs and affected implementation timelines.

The utility said some developers indicated they would prefer to forgo central financial assistance if restrictions on the use of imported solar cells were relaxed. MSEDCL added that earlier tenders mandating domestic content requirements had received limited participation, and the revised tender conditions allowing the use of non-DCR solar cells could help improve participation and lead to more competitive tariffs.

In the present petition, MSEDCL sought approval to issue a new tender under MSKVY 2.0 with two key deviations from earlier bidding documents.

First, the tender would be delinked from the central financial assistance available under PM-KUSUM Component C. Second, the utility proposed introducing a ceiling tariff of ₹2.90 (~$0.031)/kWh to control procurement costs.

During the proceedings, MSEDCL informed the Commission that the bidding process had continued while the petition was under consideration and that bids had been received for a capacity of 2,269 MW.

The utility submitted that the weighted average tariff from these bids could be around ₹2.81 (~$0.030)/kWh. It also stated that delinking the procurement from central financial assistance could lead to estimated savings of about ₹47 billion (~$509.17 million).

MSEDCL also provided an update on the program’s project implementation. Letters of award had been issued for more than 15,400 MW of distributed solar capacity, and power purchase agreements had been executed for about 15,383 MW. As of November 2025, approximately 2,229 MW had been commissioned.

Under the earlier MSKVY 1.0 phase, the Commission had approved procurement of 4,044 MW, but only 1,531 MW eventually signed power purchase agreements, of which about 619.5 MW had been commissioned.

The utility also informed the Commission that one developer contracted under the earlier phase, with 1,352 MW of capacity, had sought voluntary withdrawal, and the associated power purchase agreements were cancelled in November 2025.

Commission’s Analysis

The Commission examined whether the proposed procurement was consistent with earlier regulatory approvals.

MERC noted that through earlier orders, it had approved procurement of 18,835 MW of distributed solar capacity for agricultural feeder solarisation under MSKVY and MSKVY 2.0.

Out of this approved capacity, MSEDCL had executed power purchase agreements for about 16,914 MW, leaving 1,921 MW yet to be contracted.

The Commission also considered the shortfall arising from incomplete commissioning under MSKVY 1.0, which amounted to about 911 MW.

Based on these figures, MERC determined that the total shortfall against the previously approved capacity stood at approximately 2,832 MW. Since the proposed procurement of 2,269 MW falls within this limit, the Commission found that the request does not exceed the capacity already approved by the regulator.

The Commission accepted MSEDCL’s justification that delinking the tender from central financial assistance and introducing a tariff ceiling could help discover lower tariffs through competitive bidding.

MERC also reiterated that distribution licensees may specify ceiling tariffs in competitive bidding processes and that the Commission will assess the competitiveness of the discovered tariff at the stage of tariff adoption.

Accordingly, the Commission allowed MSEDCL to proceed with competitive bidding for 2,269 MW of distributed solar power under MSKVY 2.0, subject to the proposed deviations in the bidding documents.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.