MERC Okays MSEDCL Plan to Procure Renewable Power with Competitive Bidding

Decision should ease MSEDCL’s Renewable Purchase Obligation shortfalls


The Maharashtra State Electricity Distribution Company Limited (MSEDCL) has won approval to procure wind, solar, and bagasse‑based cogeneration power at a rate discovered through a tariff‑based competitive bidding process. Rates can be discovered for the procurement of power on a short-term, medium-term, and long-term basis.

The Maharashtra Electricity Regulatory Commission (MERC) approved MSEDCL’s petition so that the agency can more effectively procure the power it needs to meet its Renewable Purchase Obligation (RPO). In financial year (FY) 2016-17, MSEDCL reported a solar RPO shortfall of 693 Million Units (MUs) and a non-solar RPO shortfall of 1,822 MUs. That shortfall persisted into the first quarter of 2017-18, which reported a solar RPO shortfall of 532 MUs and a non-solar RPO shortfall of 970 MUs.

To meet its RPO requirement, MSEDCL needs to contract power from renewable sources on a short-, medium-, and long-term basis. For MSEDCL, the RPO requirement is 2.0 percent for solar and 10.5 percent for non-solar sources in 2017-18. For the procurement, the upper ceiling will be the tariff determined by MERC in its tariff order. The guidelines set up by the Ministry of New and Renewable Energy (MNRE) for the tariff-based competitive bidding process for grid-connected power projects will be applied to the procurement of power from these sources.

The order will provide relief to tendering agencies like MSEDCL in Maharashtra. It is also the latest demonstration of an ongoing trend of State Electricity Regulatory Commissions (SERCs) and judicial bodies like State High Courts expediting the hearing of petitions and the resolution of issues. Similar issues were recently resolved by the respective SERCs and government bodies in Andhra Pradesh, Gujarat, and Tamil Nadu.

MERC has directed MSEDCL to consider procuring power to meet its RPO on a medium- and long-term basis. MERC will also allow MSEDCL to consider the wind power procured on a short-term basis, following the analogous of purchase of renewable energy certificates (REC’s), to count toward fulfilling its RPO target for the relevant period.

MERC accepted the draft Request for Selection (RfS) and Power Purchase Agreement (PPA) prepared by MSEDCL for the procurement of wind, solar, and bagasse-based cogeneration power on a short-, medium-, and long-term basis, in line with the Ministry of Power’s guidelines for short-term procurement as available on the DEEP portal and its guidelines for long-term solar and wind power purchases. If MSEDCL needs to amend the bidding documents, it must petition MERC for permission before it begins the bidding process.