Adani Green Energy has received a letter of intent (LoI) from the Maharashtra State Electricity Distribution Company (MSEDCL) to supply 5 GW of solar power from the Khavda Renewable Energy Park in Gujarat.

The company will sign a long-term power purchase agreement (PPA) with MSEDCL to supply solar power from the 538 sq km renewable energy park as part of the LoI to provide 6,600 MW of power from  Adani Power (APL).

Adani Power will also supply 1,496 MW (net) of thermal energy from a new 1,600 MW ultra-supercritical thermal power project. The remaining 104 MW will be allocated for auxiliary consumption.

The tender had allowed bids to be placed for thermal power capacity along with solar power capacity.

The 6,600 MW capacity was secured through a competitive bidding process initiated by MSEDCL.

The solar capacity has been allocated at a flat tariff of ₹2.70 (~$0.03)/kWh for 25 years.

The solar projects will be connected to the interstate transmission system (ISTS) and developed in phases over three years from executing the PPAs with MSEDCL.

In July 2024, the Maharashtra Electricity Regulatory Commission approved MSEDCL’s petition to procure 5,000 MW of solar and 1,600 MW of thermal power.

The plant load factor considered for determining the tariff under the tender was 85% for thermal power and 24% for solar. The fixed charge and energy charge for the thermal power was taken as ₹2 (~$0.024)/kWh and ₹3 (~$0.036)/kWh, respectively. The tariff cap for solar was taken as ₹2.75 (~$0.033)/kWh, and the weighted average tariff taken for solar (5,000 MW) and thermal (1,450 MW) was ₹3.89 (~$0.046)/kWh. To win, a bidder had to quote the lowest weighted average tariff.

The thermal capacity has been awarded to Adani Power on a design, build, finance, own, and operate basis with fuel sourcing from coal linkages. The company will enter a 25-year power supply agreement with MSEDCL to supply thermal power from the 1,600 MW (2×800 MW) project. Under the proposed agreement, the power supply will start three and a half years after the appointed date in the case of Unit 1 (800 MW) and after four years from Unit 2 (800 MW).

Adani Green’s wind-solar hybrid power project in Jaisalmer has been powering Mumbai city with green energy since March 2023. As of June 2024, the share of renewable energy in the Mumbai distribution circle’s energy mix was 37%.

Maharashtra’s target Renewable Power Purchase obligation (RPO) for FY 2024-25 is 25% (Solar 13.5% and non-solar 11.5%). MSEDCL is facing a shortfall in meeting the RPO for FY24 and FY25. The RPO trajectory gets steeper with the surge in electricity demand.

The Ministry of Power has issued draft guidelines for Renewable Generation Obligation (RGO) for the operational and upcoming coal/lignite-based generating stations. Generating stations coming online on or after April 1, 2025, must supplement their conventional generation with a minimum supply of renewables of up to 10%. So, MSEDCL has decided to procure 5,000 MW of solar power capacity so potential coal-based power generators can fulfill their RGO obligations.

In September 2024, Adani Green and TotalEnergies announced an equally owned joint venture to manage a portfolio of 1,150 MW of solar projects at Khavda. While Adani Green will contribute its current assets to the projects, TotalEnergies will invest $444 million to speed up its development. The electricity generated from the projects is expected to be sold through power purchase agreements with Solar Energy Corporation of India and sales in the wholesale market.