The Maharashtra Electricity Regulatory Commission (MERC) has approved Maharashtra State Electricity Distribution Company’s (MSEDCL) petition for the procurement of an additional 500 MW of pumped hydro storage capacity from Torrent Power.

The approval allows MSEDCL to contract this additional capacity at the same tariff adopted earlier under a competitive bidding process. The Commission clarified that this approval is an exceptional case and will not be treated as a precedent for future procurement.

Background

MSEDCL had floated a tender on March 9, 2024, for the procurement of 2,000 MW of energy storage capacity, with an additional 1,000 MW under the greenshoe option, from intrastate connected pumped hydro storage projects. The scope of procurement involved eight hours of discharge, with a maximum of five hours of continuous discharge, over a 40-year period.

The company filed a petition on June 13, 2024, seeking approval of the procurement process and bid documents. MERC, through its order dated July 12, 2024, approved the procurement of 3,000 MW (2,000 MW base capacity plus 1,000 MW under the green shoe option). It subsequently approved an additional 1,000 MW under the greenshoe option, bringing the total permissible capacity to 4,000 MW.

The successful bidders were JSW Neo Energy, with 1,500 MW (500 MW base plus 1,000 MW greenshoe), and Torrent Power, also with 1,500 MW (500 MW base plus 1,000 MW greenshoe).

The Commission adopted the discovered tariffs of ₹8.46 million (~$98,372.09)/MW/annum with a 24% cycle loss for JSW Neo Energy and ₹8.39 million (~$97,558.14)/MW/annum with a 25% cycle loss for Torrent Power.

Following the adoption of the tariff, letters of award were issued to the successful bidders. Torrent Power subsequently requested the allocation of an additional 500 MW at the same tariff, bringing its total contracted capacity to 2,000 MW.

MSEDCL filed the petition seeking approval for the increased allocation.

Commission’s Analysis

The Commission noted that the total permissible capacity under the tender stood at 4,000 MW, of which 3,000 MW had already been allocated. The additional 500 MW requested by MSEDCL was within the balance capacity available under the tender.

MERC observed that, normally, any additional procurement should be carried out through a fresh round of bidding after tariff adoption. However, it took into account the competitive tariff offered by Torrent Power and the growing need for storage capacity to integrate renewable energy.

The Commission noted that long-term procurement from pumped hydro storage projects would assist MSEDCL in fulfilling its Energy Storage Obligation as mandated under the MERC RPO (First Amendment) Regulations 2024.

It emphasized that pumped hydro storage would provide a critical facility for storing renewable energy that cannot be consumed at the time of generation, thereby optimizing power purchase costs by avoiding the need to sell surplus renewable energy at low market rates.

The Commission approved the procurement of 500 MW additional pumped hydro storage capacity from Torrent Power at a tariff of ₹8.39 million (~$97,558.14)/MW/annum, with a 25% cycle loss, the same tariff adopted earlier.

Recently, MERC reiterated the regulatory requirement that rooftop solar generation under simultaneous open access must be credited under net metering as per the amended 2023 regulations.

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