DISCOM to Procure from Bagasse-Based Plant for Short-Term to Meet Peak Power Demand

Listen to this article

The Maharashtra Electricity Regulatory Commission (MERC) approved the short-term power procurement by KRC distribution companies (DISCOMs) with 8 MW of round-the-clock (RTC) power from November 1, 2022, to October 31, 2023, and peak power of 4 MW, including renewable energy from a bagasse-based plant from November 1, 2022, to February 28, 2023.

KRC DISCOMs, namely Mindspace Business Parks, Gigaplex Estate, and KRC Infrastructure and Projects, are deemed DISCOMs in the special economic zones located at Kalwa and Airoli in Thane and Kharadi in Pune.

KRC DISCOMs had filed a petition requesting the Commission to adopt the average tariff of ₹6.35 (~$0.077)/kWh for the procurement of 8 MW of RTC power from November 1, 2022, to October 31, 2023, and the average tariff of ₹7.95 (~$0.096)/kWh for the procurement of 4 MW of peak power from November 1, 2022, to February 28, 2023.

The 4 MW peak power supplied by NSL Sugars is generated from a bagasse-based plant offering a renewable alternative. Renewable power generated from bagasse-based plants could be considered a potential alternative for DISCOMs considering short-term renewable energy procurement.

Background

In June last year, the Commission had accorded its approval for the procurement of up to 14 MW from Kreate Energy for one year from July 1, 2021, to June 30, 2022, at the tariff of ₹3.18 (~$0.038)/kWh.

As this short-term power purchase agreement (PPA) expired on June 30, 2022, KRC DISCOMs initiated a competitive bidding process to procure short-term power in April 2022. KRC DISCOMs received only one bid at the discovered rate of ₹6.80 (~$0.082)/kWh, which was canceled considering less participation and the discovery of a higher tariff at the time. In the absence of PPAs, KRC DISCOMs started to procure power from the power exchanges and from the bilateral arrangement under the exchange-linked pricing mechanism from July 1, 2022.

KRC DISCOMs filed a petition before the Commission for approval of power purchase from the power exchanges at exchange-linked prices from July 2022 onwards till alternative arrangements are put in place.

Later, KRC DISCOMs carried out competitive bidding for combined short-term power procurement several times but did not get the expected response.

KRC DISCOMs initiated the fifth short-term competitive bidding process on August 9, 2022.

After the e-reverse auction and further negotiations, GMR Energy Trading offered a reduced average rate of ₹6.35 (~$0.077)/kWh for the procurement of 8 MW of RTC power, and PTC India reduced the average rate to ₹7.95 (~$0.096)/kWh for procurement of 4 MW of peak power.

The DISCOMs added that NSL Sugars were supplying the peak power, a bagasse-based plant offering renewable energy, which would be sufficient to meet the renewable purchase obligation (RPO) requirement of KRC DISCOMs from November 1, 2022, to February 28, 2023.

KRC DISCOMs stated that they had entered into individual PPAs on September 14, 2022, with GMR Energy Trading for the supply of base RTC power of 5 MW, 1.5 MW, and 1.5 MW at Maharashtra state periphery for the period from November 1, 2022, to October 31, 2023. Further, KRC DISCOMs had entered into individual PPAs for the supply of peak power of 2 MW, 1 MW, and 1 MW at the Maharashtra state periphery from November 1, 2022, to February 28, 2023.

KRC DISCOMs submitted that GMR Energy Trading and PTC India were Category 1 interstate trading licensees notified by the Central Electricity Regulatory Commission.

Commission’s analysis

The Commission noted that GMR Energy Trading had emerged as the lowest bidder with an average tariff rate of ₹6.35 (~$0.077)/kWh for the baseload of 8 MW from November 1, 2022, to October 31, 2023, and PTC India had emerged as the lowest bidder with an average tariff rate of ₹ 7.95 (~$0.096)/kWh for a peak load of 4 MW from November 1, 2022, to February 28, 2023.

The Commission said that although the peak power rate was on the higher side, the weighted average power purchase rate of RTC and Peak Power was estimated as ₹6.76 (~$0.082)/kWh from November 1, 2022, to February 28, 2023, and ₹6.45 (~$0.078)/kWh for the RTC power from March 1, 2023, to October 31, 2023, which was in line with the tariffs recently adopted by the Commission.

Considering these points, the Commission stated that the rate discovered and negotiated afterward reflected the market trend. The Commission held that KRC DISCOMs had followed the procedure stipulated under the competitive bidding guidelines.

The state regulator observed that the PPAs signed with GMR Energy Trading and PTC India were in line with the standard bidding documents issued by the Ministry of Power. Accordingly, the Commission approved PPAs signed with GMR Energy Trading and PTC India at the rate discovered in the bidding process.

Subscribe to our real-time Regulatory Updates to ensure that you never miss any critical updates from the renewable energy industry.