The Maharashtra Electricity Regulatory Commission (MERC) has approved Maharashtra State Electricity Distribution Company’s (MSEDCL) proposal to procure 2 GW/4 GWh battery energy storage capacity for 15 years, at a tariff of ₹165,998 (~$1,806)/MW per month.

The approved capacity will be allocated among seven successful bidders: Mahati Industries, ArMee Infotech, Diwakar Renewable & Infra, Bhilwara Energy, OPG Power Generation, Patanjali Ayurved, and Onward Solar Power.

The Commission also directed MSEDCL to execute battery energy storage purchase agreements (BESPA) with the successful bidders within 15 days of the order.

The stored energy from these projects will count towards MSEDCL’s energy storage obligation (ESO) under the renewable purchase obligation (RPO) framework.

However, the tariff adoption remains subject to the outcome of a writ petition pending before the Bombay High Court filed by Onward Solar Power challenging the bidding process.

Background

MSEDCL filed a petition seeking approval of the tariff determined through competitive bidding for the procurement of 2 GW/4 GWh battery storage capacity to meet its increasing renewable energy integration needs and energy storage obligations.

The tender was issued in July last year, with viability gap funding (VGF) support of ₹1.8 million (~$19,593.9)/MWh. A total of 46 bidders participated, offering an aggregate capacity of 11.11 GW, indicating strong competition. The e-reverse auction conducted in November last year identified the lowest tariff of ₹165,998 (~$1,806)/MW per month.

MSEDCL emphasized the need for large-scale battery storage installations given the intermittent nature of solar and wind energy. Since renewable generation depends on weather and seasonal conditions and does not align with peak and night-time demand patterns, firming support through energy storage is essential.

Contracting adequate storage capacity would enable MSEDCL to meet projected peak demand, reduce renewable curtailment, manage surplus solar energy, and ensure a reliable round-the-clock supply.

Several respondents raised concerns regarding the bidding process and tariff structure.

Onward Solar Power argued that although it emerged as an L2 bidder for 50 MW capacity and offered to match the L1 tariff, MSEDCL adopted a non-disclosed first-come, first-serve allocation mechanism, which it argued violated the ranking principles in the competitive bidding guidelines.

It also argued that the tariff adoption process should be kept in abeyance until the High Court decided its challenge.

Bhilwara Energy expressed interest in adding an additional 200 MW/400 MWh capacity. However, it received no response from MSEDCL. The company stated that although it initially offered to take an additional 200 MW capacity under the L1 matching process, it later withdrew this offer and confirmed that it could proceed only with its original 500 MW capacity.

OPG Power Generation also raised concerns regarding the tariff structure, stating that the tender provides for a fixed monthly capacity charge and does not envisage conversion to a per-unit (kWh) tariff, or any reduction in capacity charges due to permissible battery degradation, without a corresponding reduction in charges. It stated that the tariff should not be converted into a per-unit storage cost or reduced due to battery degradation.

Mahati Industries objected to a possible increase in lifecycle performance obligations from about 5,475 cycles to 6,300 cycles. The developer argued that the enhanced cycle requirement was introduced after tariff discovery and could alter the technical and financial assumptions underlying the bid.

Commission’s Analysis

MERC concluded that MSEDCL had conducted the procurement through a transparent and competitive process in accordance with Section 63 of the Electricity Act.

With respect to L1 matching disputes raised by Onward Solar, the Commission noted that MSEDCL subsequently agreed to allocate 100 MW of capacity to Onward Solar, thereby addressing the developer’s concerns.

Regarding the issuance of the letter of award (LoA), the Commission noted that the bidding guidelines require the issuance of LoA to successful bidders post conclusion of the bidding process. However, the non-issuance of LoA does not violate the bidding process.

However, in the future, MSEDCL should ensure that the procedural formalities envisaged in the bidding guidelines are complied with.

The Commission held that the discovered tariff of ₹165,998/MW per month was competitive compared with other recent battery storage tenders. For instance, tariffs in other states ranged between ₹177,000 (~$1926.7) and ₹254,000 (~$2,764.9)/MW per month, demonstrating that the discovered price reflected market competition.

It also accepted MSEDCL’s clarification that the ₹2.91 (~$0.032)/kWh figure mentioned in the petition was only an illustrative calculation, and the tariff sought for approval remained the fixed capacity charge in ₹/MW/month.

After Bhilwara Energy withdrew its additional 200 MW request, the capacity was redistributed among other bidders, including OPG Power and Onward Solar Power, while maintaining the total capacity at2 GW.

On the issue of increasing the lifecycle requirements to 6,300 cycles, the Commission observed that the original request for selection (RfS) required operation of one cycle per day over 15 years. It noted that the Ministry of Power’s letter, which permitted 6,300 cycles, required only that MSEDCL retain the right to utilise the battery up to that level and did not impose a mandatory obligation on developers.

MERC ruled that the RfS conditions remain unchanged and the single-cycle-per-day requirement continues to apply.

In March last year, MERC approved MSEDCL’s petition to procure 250 MW/500 MWh battery storage capacity with an additional 500 MW/1,000 MWh greenshoe capacity at a tariff of ₹219,001 (~$2,560)/MW/month for 12 years.

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