The Maharashtra Electricity Regulatory Commission (MERC) recently approved the procurement of 12.5 MW of solar power by the Maharashtra State Electricity Distribution Company Limited (MSEDCL) under Component A of the Pradhan Mantri Kisan Urja Suraksha evam Uthhan Mahabhiyan (PM-KUSUM) program.

The Commission allowed MSEDCL to enter into power purchase agreements (PPAs) for 25 years with the successful bidders. The approved tariffs range between ₹3.05 (~$0.041)/kWh and ₹3.10 (~$0.042)/kWh.

Also, the Commission clarified that power procured from these projects would be eligible towards the fulfillment of solar renewable purchase obligation (RPO) by MSEDCL.

MSEDCL had filed a petition seeking approval to adopt the tariff discovered for long-term procurement of 12.5 MW solar power under Component A of the KUSUM program.

Background

As per the Ministry of New and Renewable Energy (MNRE) guidelines, MSEDCL floated tender for long-term procurement of 500 MW solar power with a ceiling tariff of ₹3.05 (~$0.041)/kWh under Component A of the KUSUM program on June 01, 2021.

As per MNRE guidelines, MSEDCL was liable to receive procurement-based incentive at ₹0.40 (~$0.005)/kWh of power purchased or ₹660,000 (~$8,837)/MW of capacity installed, whichever is less, for five years from the commercial operation date.

Later, the ceiling tariff was increased to ₹3.10 (~$0.042)/kWh.

The financial bids were opened on October 18, 2021, and the rates quoted by the bidders are given below:

MSEDCL, in its submission, said that it had a cumulative shortfall of 4,219 MU for meeting the solar RPO targets and 9,504 MU for meeting the non-solar RPO targets up to FY 2020-21.

Commission’s analysis

The Commission observed that under Component A of the KUSUM program, MSEDCL was eligible for a procurement-based incentive of ₹0.40 (~$0.005)/kWh or ₹660,000 (~$8,837)/MW of installed capacity, whichever is less, for five years from the commercial operation date of the project.

Further, the Commission noted that MSEDCL had used the model PPA provided by MNRE for bidding. As bids for only 12.5 MW were received against tender for 500 MW, the reverse auction process was not undertaken.

MERC said that the tariffs discovered in the bidding process reflected current market trends, and the impact of the tariffs on the consumers would be offset to the extent of procurement-based incentives.

Accordingly, the Commission decided to approve the tariffs ranging between ₹3.05 (~$0.041)/kWh and ₹3.10 (~$0.042)/kWh for 12.5 MW of solar power by MSEDCL on a long-term basis for 25 years.

The Commission also approved the request for selection (RfS) and the bidding document floated by MSEDCL for the bidding process.

The state regulator asked the distribution company (DISCOM) to take necessary steps to provide adequate publicity to KUSUM program so that more bids are received for future tenders.

Last December, MERC approved the procurement of 111 MW of power from grid-connected solar projects under the ‘Mukhyamantri Saur Krishi Vahini Yojana.’ The Commission allowed MSEDCL to enter into PPAs with the successful bidders for 25 years.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.