State Transmission Utility Must Maintain Solar Evacuation Infrastructure: MERC

MSEDCL had petitioned the commission regarding a 1 GW floating solar project on Ujjani Dam


The Maharashtra Electricity Regulatory Commission (MERC) has approved the competitive bidding process for long-term procurement of 1 GW power from floating solar projects which will be established on the state’s Ujjani Dam.

The bidding guidelines were proposed by the Maharashtra State Electricity Distribution Company Limited (MSEDCL) so it could procure power from these projects to meet its renewable purchase obligation (RPO).

The MSEDCL had petitioned the MERC for the initiation of competitive bidding process, to approve the bidding documents (Draft request for selection and power purchase agreement) and consider this procurement of power for meeting its solar RPO requirement.

The MSEDCL had sought deviation from the central government’s guidelines regarding the compensation paid in case of grid unavailability. The MSEDCL had proposed that after the scheduled commissioning date, if the project is ready but the necessary power evacuation infrastructure beyond delivery point is not ready, no compensation will be permissible to the generator.

Moreover, it proposed that during the operation of the project, there can be some periods where the project can generate power but due to unavailability of temporary transmission, the power is not evacuated. In such cases too, no compensation will be permissible to the generator.

The MSEDCL had also proposed a tariff ceiling of ₹2.71 (~$0.0384)/kWh and a PPA period of 25 years.

Reviewing these proposals, the commission approved its PPA tenure of 25 years and asked the MSEDCL to review the proposed ceiling tariff. Regarding the proposed ceiling tariff, the commission was of the opinion that with the technology being at a nascent stage, the ceiling tariff should not be so low that it does not attract potential bidders and at same time the discovered rate should be in the interest of end consumer.

The MERC noted that the development of transmission infrastructure is the sole responsibility of the developer and ruled that the deviation sought with regards to the generation compensation in offtake constraint will be allowed.

However, the state commission asserted that though the responsibility of constructing the evacuation infrastructure up to the sub-station lies with the developer and after the completion of the project, the developer has to transfer the entire asset to the Maharashtra State Electricity Transmission Company Ltd (MSETCL), which is the state transmission utility (STU) and such infrastructure will form a part of the grid. So, the responsibility of maintaining such infrastructure will be with MSETCL and not with the developer. In the end, the MERC did not approve MSEDCL’s proposal which argued that no compensation should be provided to the generator in case of temporary transmission unavailability beyond the delivery point the power. The MERC also approved the procurement of such power for meeting the solar RPO requirement of MSEDCL.

Recently MERC also approved PPAs for grid-connected solar projects totaling 235 MW at the behest of MSEDCL.

Image credit: Jakson Solar