The Maharashtra Electricity Regulatory Commission (MERC) has approved the proposal of the Maharashtra State Electricity Distribution Company (MSEDCL) to procure 700 MW of solar power through the Solar Energy Corporation of India (SECI) under the Inter-State Transmission System (ISTS) Solar Tranche-XIII.

The Commission adopted a tariff of ₹2.63 (~$0.031)/kWh, with a trading margin of ₹0.07 (~$0.0008)/kWh. It also approved the 25-year power sale agreement (PSA) executed between MSEDCL and SECI.

Background

MSEDCL filed a petition seeking approval for long-term procurement of solar power to meet its rising renewable purchase obligation (RPO) target which is set to increase from 29.91% in the financial year (FY) 2024–25 to 43.33% by FY 2029–30.

In June 2024, SECI offered an allocation of 3,000 MW of solar capacity under ISTS Solar Tranche-XIII and XIV, through tariff-based competitive bidding. MSEDCL issued an in-principle consent for the procurement of the entire capacity at discovered tariffs ranging from ₹2.56 (~$0.030) to ₹2.58 (~$0.031)/kWh.

After an internal evaluation, MSEDCL found that only 700 MW of the allocated capacity to JSW Neo Energy was commercially viable. The project is proposed to be set up in Maharashtra and connected to the ISTS network, resulting in a landed tariff of ₹2.63 (~$0.031)/kWh.

MSEDCL submitted that as of September 30, 2024, it had contracted 25,569 MW of renewable capacity, of which only 10,431 MW had been commissioned, highlighting the need for additional long-term procurement.

It also pointed out that the discovered tariff of ₹2.56 (~$0.030)/kWh, excluding trading margin, was significantly lower than its average power purchase cost of ₹4.82 (~$0.058)/kWh for FY 2023–24 and had already been adopted by the Central Electricity Regulatory Commission for the broader Tranche-XIII projects.

Commission’s Analysis

MERC examined the quantum of procurement, the competitiveness of the tariff, the applicability of the trading margin, and the utilization of solar power. It noted that the proposed 700 MW procurement had been factored into MSEDCL’s resource adequacy plan and was consistent with projections made by the Central Electricity Authority’s resource adequacy studies.

On tariff, MERC observed that the rate was discovered through a transparent competitive bidding process conducted by SECI and that its role was limited to adoption of the tariff rather than re-determination.

The trading margin of ₹0.07 (~$0.0008)/kWh was found to be in line with applicable regulations governing competitive bidding and trading licenses.

The Commission examined MSEDCL’s submissions regarding its preparedness to absorb solar power, particularly during non-solar hours. MERC concluded that these measures were adequate to manage variability and ensure grid stability.

Based on its findings, the Commission approved the procurement of 700 MW of solar power from SECI at the adopted tariff.

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