The Maharashtra Electricity Regulatory Commission (MERC) has approved tariffs ranging between ₹4.43 (~$0.049)/kWh and ₹4.77 (~$0.05)/kWh for Tata Power Company’s 250 MW firm and dispatchable renewable energy (FDRE) projects with energy storage systems.

The Commission directed that power procured from the FDRE projects will be treated as meeting Tata Power’s renewable purchase obligation.

Tata Power must execute the power purchase agreements (PPAs) within 30 days.

Background

As part of its long-term power procurement strategy, the petitioner, Tata Power, planned to secure power from FDRE projects in the financial year (FY) 2028 to facilitate load matching and optimize its power purchase costs.

Accordingly, Tata Power floated a tender to procure power from 250 MW FDRE projects. The tender saw participation from six companies bidding for 560 MW, and five qualified for the financial bidding round.

During the technical evaluation, the Ministry of New and Renewable Energy issued an office memorandum mandating the use of the Approved List of Models and Manufacturers (ALMM) for modules and cells in renewable energy projects. Since the mandate came after the last submission date for Tata Power’s 250 MW FDRE projects, only ALMM compliance for modules was mandated.

Tata Power asked the bidders to re-evaluate their price offers and submit revised offers. Considering the policy change, the bidders submitted lower initial price offers.

The DISCOM stated that the evaluation point for tariff discovery was the Maharashtra State Transmission Utility periphery.

It also stated that for projects located outside Maharashtra, ₹0.33 (~$0.003)/kWh was added to the bidding tariff for evaluation to account for inter-state transmission system (ISTS) and intra-state transmission system (InSTS) charges. Tata Power justified an additional ₹0.33 (~$0.003)/kWh to the bidding tariff to enable comparison with InSTS projects.

Tata Power clarified that while awarding the projects, the earlier added ₹0.33 (~$0.003)/kWh would be deducted while issuing the tariffs.

Further, Tata Power issued letters of award (LoAs) for 70 MW, 50 MW, and 50 MW to Juniper Green Energy, Navayuga Engineering Company (NECL), and ACME Solar Holdings, respectively, at a tariff of ₹4.76 (~$0.05)/kWh.

It also issued LoA for 80 MW to Tata Power Renewable Energy, which quoted a tariff of ₹4.77 (~$0.05)/kWh.

The DISCOM approached the Commission to approve the discovered tariffs and the PPAs signed between the bidders and Tata Power.

Commission’s Analysis

The Commission noted that the tariffs were discovered through a transparent and competitive bidding process.

It observed that the landed tariffs for FDRE projects ranged between ₹4.58 (~$0.05)/kWh and ₹8.83 (~$0.09)/kWh, after accounting for ISTS charges and transmission losses of ₹0.33 (~$0.003)/kWh. The Commission noted that the discovered tariffs fall under this range and found them reasonable.

The proposed tariffs are lower than Tata Power’s approved long-term power purchase cost, indicating potential cost savings for the DISCOM.

The Commission approved tariffs ranging from ₹4.43 (~$0.049)/kWh to ₹4.77 (~$0.05)/kWh, noting that they are in line with market conditions.

The Commission also took note of NECL’s decision to change the project from an ISTS project to an intrastate transmission system (InSTS) project and its request to restore tariffs to ₹4.76 (~$0.05)/kWh, as Tata Power deducted ₹0.33 (~$0.003)/kWh from the awarded tariff for ISTS projects.

The Commission ruled that NECL and Tata Power must resolve the tariff issues arising from the change of its FDRE project from an ISTS to an InSTS project, in accordance with the tender and bidding guidelines.

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