The Maharashtra Electricity Regulatory Commission (MERC) has approved a short-term power purchase for 3 MW of non-solar, non-wind power on a round-the-clock (RTC) basis by Nidar Utilities Panvel (NUPLLP) from February 1, 2024, to January 31, 2025, at ₹5 (~$0.06)/kWh at the state periphery.

The Commission also directed Nidar Utilities to initiate the process for long-term power procurement through a tender or open access in advance so that it can tie up its base load requirement through a long-term power purchase agreement (PPA).

Background

Nidar Utilities, a distribution licensee serving the Panvel Special Economic Zone (SEZ) area in Raigad District, meets its 5.5 MW power demand through two short-term PPAs.

One PPA, with Vindhyachal Hydro Power (VHPPL), provides 3 MW of power from February 2023 to January 2024. The other, with GMR Energy Trading, offers 3 MW RTC power from July 2023 to June 2024.

As the PPA with VHPPL expired on January 31, 2024, Nidar Utilities sought a new power source to sustain its 5.5 MW base load from February 1, 2024. To address this, Nidar Utilities issued a tender on September 12, 2023, aiming to procure 3 MW of non-solar, non-wind power for continuous delivery from February 1, 2024, to January 31, 2025.

Following public notice, VHPPL submitted a bid for power from its small hydro project in Maharashtra. The bid concluded with a final price of ₹5 (~$0.06)/kWh, lower than previous rates approved by the Commission.

Consequently, the contract was awarded to VHPPL, with a letter of award issued on October 5, 2023, and the PPA executed on October 11, 2023, pending Commission approval.

Anticipating a potential demand increase to 7 MW by March 2024 and with the existing PPA of 3 MW with GMRETL ending in June 2024, NUPLLP will initiate the process of short-term power procurement for the additional quantum based on the demand of power starting April 2024 and will approach the Commission for adoption of tariff.

In response to queries about procuring renewable power from the Solar Energy Corporation of India (SECI) at potentially lower rates, Nidar Utilities explained that its primary consumer, a data center accounting for 90% of its power consumption, requires dependable RTC power due to high energy needs.

Lower rates from SECI tenders, typically for larger solar or solar-wind hybrid projects, do not align with Nidar Utilities’ 3 MW RTC requirement, particularly during peak demand times.

Additionally, wind energy’s variability poses operational challenges. VHPPL’s 3 MW plant, with a projected annual generation of around 15 MU and a capacity utilization factor of 60%, better matches Nidar Utilities’ demand profile and operational needs.

Commission’s Analysis

The Commission acknowledged NUPLLP’s efforts to address its 5.5 MW demand through existing and proposed PPAs. With the ongoing 3 MW PPA with VHPPL expiring on  January 31, 2024, and a short-term PPA with GMR ETL concluding in June 2024, NUPLLP’s proposal to secure 3 MW of RTC power assures a steady power supply for its consumers.

NUPLLP’s competitive bidding process resulted in a rate of ₹5 (~$0.06)/kWh, aligning with the existing rate from VHPPL. Despite varying rates on the Discovery of Efficient Electricity Price (DEEP) portal (₹5 (~$0.06) to ₹7.9 (~$0.095)/ KWh) and the power exchange (₹5.45 (~$0.066) to ₹5.8 (~$0.07)/ KWh), the Commission found the ₹5 (~$0.06) reasonable and reflective of the current market conditions.

Furthermore, NUPLLP’s selection of VHPPL, offering power with a Capacity Utilization Factor of 60%, complements NUPLLP’s load profile, minimizing variability in generation while meeting renewable purchase obligation targets efficiently.

Based on these considerations, the Commission approved NUPLLP’s short-term power purchase from February 1, 2024, to January 31, 2025, at ₹5 (~$0.06)/kWh. The Commission approved the PPA between NUPLLP and VHPPL.

Recognizing NUPLLP’s intention to explore long-term power procurement, the Commission permitted NUPLLP to continue short-term procurement against the expiring PPA. However, NUPLLP was urged to initiate the long-term procurement process promptly to secure its base load requirement through future PPAs.

In August, the Commission proposed amendments to the RPO, its Compliance and Implementation of Renewable Energy Certificate Framework Regulations, 2019.

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