Maharashtra to Renegotiate Tariffs for 1,170 MW of Auctioned Solar Projects

The Maharashtra Electricity Regulatory Commission (MERC) has ordered Maharashtra State Electricity Distribution Company Limited (MSEDCL) to renegotiate tariffs with solar developers for projects allocated to them.

In this case, MSEDCL had filed an instant petition requesting the commission’s approval for the adoption of tariff for 1,170 MW of solar power under the ‘Mukhyamantri Saur Krishi Vahini Yojana’ for meeting its solar renewable purchase obligation (RPO) requirement.

MSEDCL had floated district-wise tenders earlier this year to procure power from projects totaling 1,400 MW. However, the DISCOM only received bids totaling 1,170 MW. Later, MSEDCL approached the MERC for the adoption of tariffs for the following:

  • 10 MW which was allocated at a tariff of ₹3.16/kWh (~$0.045/kWh)
  • 60 MW which was allocated at a tariff of ₹2.8 or ₹3.29/kWh (~$0.047/kWh)
  • 1,100 MW which was allocated at a tariff of ₹3.0/kWh (~$0.047/kWh)

The request for the adoption of the tariff was intervened by an individual named Nitin Shetty through an application that objected to such adoption of tariff on the grounds that MSEDCL is proposing tariff based on a single bid without going for retendering.

The commission has now ruled that the objection will be rejected since MSEDCL carried out bidding through a transparent mechanism. Also, the MERC found that it cannot adopt the tariffs that were discovered through the MSEDCL tenders under the Mukhyamantri Saur Krishi Vahini Yojana as they were higher than tariff bids discovered through another 1,000 MW tender which ranged between ₹2.74 to ₹2.75/kWh (~$0.039).

The commission’s analysis also noted that Mercom Capital Group’s report published in January 2019, stated that solar modules prices had been consistently falling in the international market and have stabilized at that level since December 2018. Further, it said that there was no significant fluctuation in the dollar-rupee exchange rate for over six months.

Therefore, the commission has ruled that MSEDCL would need to renegotiate tariffs for this tender to match the tariffs in recent bids.

The commission also mentioned that if after the renegotiation, the tariffs are in the same range as the previously adopted tariffs of ₹3.09 to ₹3.15 (~$0.04)/kWh for 235 MW of projects proposed by MSEDCL under Mukhyamantri Saur Krishi Vahini Yojana in November 2018, then MERC will accept it, and no new petition will be required.

In May 2019, the lowest tariff of ₹2.71/kWh (~$0.039) was quoted in the auction held by MSEDCL for the development of 1 GW of grid-connected solar projects in the state. This was the lowest solar tariff for a grid-connected solar PV project in Maharashtra.