The Maharashtra Electricity Regulatory Commission (MERC) has set a generic tariff of ₹3.05 (~$0.037)/kWh for distribution companies (DISCOMs) to procure surplus power from rooftop solar projects for the financial year (FY) 2023-24.

The Commission said it would be mandatory for DISCOMs to procure surplus power at the end of the financial year, which would be counted toward meeting their solar renewable purchase obligation (RPO) targets.

The state regulator also set a variable charge of ₹5.93 (~$0.072)/kWh for biomass projects and ₹4.57 (~$0.055)/kWh for non-fossil fuel-based cogeneration projects for the financial year (FY) 2023-24 with effect from April 1, 2023.

Commission ruled that the tariffs notified in the order will be effective April 1, 2023.

The Commission clarified that generic tariff determination would apply only to rooftop solar projects and variable charges for biomass and non-fossil fuel-based cogeneration projects whose tariff has not been determined through the competitive bidding process.

For biomass and non-fossil fuel-based cogeneration projects, the regulations would determine tariffs only for existing projects whose energy procurement agreements (EPAs) are signed based on generic tariffs determined by the Commission in the past.

Background 

State DISCOMs currently procure surplus power from rooftop solar projects under the net metering or net billing arrangement. The state Commission must set a generic tariff for the power procured under the net metering arrangement. For the net billing arrangement, DISCOM must enter into an EPA at average power procurement cost (APPC), which would be constant for the entire period of the EPA.

In a Suo-moto order, the MERC notified the generic tariff and asked stakeholders to submit their suggestions by April 6, 2023.

In its submission, the Maharashtra State Electricity Distribution Company (MSEDCL) said that adopting a higher generic tariff for surplus power would encourage consumers to install oversized rooftop solar projects, which would pose a challenge. It also claimed it had contracted sufficient solar power quantum to fulfill its RPO target.

It also submitted that the ₹2.90 (~$0.035)/kWh tariff discovered by the Commission for 0.5 MW to 2 MW grid-connected solar projects under the Pradhan Mantri Kisan Urja Suraksha Evam Uthhan Mahabhiyan (PM-KUSUM) program must be considered as the generic tariff as it would not hinder solar adoption.

One of the other stakeholders recommended setting the APPC at ₹2 (~$0.024)/kWh for wind and solar energy, considering the difference of around 20% in APPC for FY24 within the state and the scope of downward corrections.

In its objection against the variable charges for biomass and non-fossil fuel-based cogeneration projects, the stakeholder argued that it was essential to decrease it considerably by suitably reducing the auxiliary consumption factor or escalation on fuel cost or by any other means as the existing rates are already not affordable by a majority of the consumers in Maharashtra.

Commission’s analysis

The Commission acknowledged that MSEDCL had requested the consideration of the tariff found in its tender for procuring 500 MW of solar power. Additionally, it recognized an excess of solar power accessible to consumers directly, unlike the power generated by grid-scale projects, which is available at the periphery of Maharashtra state transmission utility.

When accounting for transmission charges and losses in transmission and distribution, the effective tariffs of grid-scale projects are comparable to that of the PM-KUSUM project. Consequently, the Commission concluded it appropriate to regard the tariff discovered in PM-KUSUM as a standard tariff for procuring surplus energy from rooftop solar projects.

Responding to the stakeholder’s recommendation on setting the APPC at ₹2 (~$0.024)/kWh, the Commission noted that the APPC of each distribution licensee depends upon the sources of power purchase contracted and will vary from licensee to licensee and cannot be an ad hoc number.

The MERC also noted that none of the distribution licensees in the state had discovered tariffs for procuring energy from rooftop solar projects through competitive bidding. Further, rates discovered in other states may have a subsidy component or any other tariff benefits.

The state regulator stated that it was adhering to the directive given by the Appellate Tribunal for Electricity (APTEL) when determining fuel prices for calculating tariffs related to bagasse and biomass-based projects. It highlighted that auxiliary consumption and fuel cost escalation had been specified in the Tariff Regulations 2019 through the appropriate regulatory procedures. The Commission must follow these stipulations outlined in the Tariff Regulations 2019 and cannot deviate from them. Furthermore, the entity objecting failed to provide any scientific justification for lowering these parameters.

Accordingly, the Commission notified ₹3.05 (~$0.037)/kWh as a generic tariff for procuring surplus power from rooftop solar projects at the end of FY24.

By using the parameters in the formula stipulated in the Tariff Regulations 2019, the Commission determined the variable charges for biomass projects as ₹5.93 (~$0.072)/kWh and for non-fossil fuel-based cogeneration projects as ₹4.57 (~$0.055)/kWh for FY24.

Recently, the MERC directed the MSEDCL to pay ReNew Sun Bright ₹32.8 million (~$397,190) towards increased Basic Customs Duties on solar inverter imports and ₹26.9 million (~$325,744) towards increased Goods and Services Tax rate on renewable energy devices.

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