The Maharashtra Electricity Regulatory Commission (MERC) has adopted tariffs of ₹3.28 (~$0.039)/kWh, ₹3.29 (~$0.039)/kWh, and ₹3.30 (~$0.040)/kWh for the procurement of 8.7 MW of solar power on a long-term basis.

The Commission noted that the solar power procured from the projects would be eligible to fulfill the solar renewable purchase obligation (RPO) of the Maharashtra State Electricity Distribution Company (MSEDCL).

MSEDCL had filed a petition seeking approval for the adoption of tariffs for the long-term procurement of 8.7 MW of solar power under Component A of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) program.

Background 

In February last year, MSEDCL floated a tender for the procurement of 500 MW of solar power under the PM-KUSUM program. Due to low participation, MSEDCL decided to reissue the tender for 298 MW without any ceiling tariff in August.

A total of 10 bids were received, with a total cumulative capacity of 11.2 MW. Financial bids of nine qualified bidders were opened on September 29, 2022.

The e-reverse auction was conducted on October 3, 2022. The quoted rates were much higher than the discovered market rates at the time. Hence, the bidders were called to negotiate the quoted rates.

On May 16, 2020, the Commission approved the ceiling tariff for decentralized projects as ₹3.30 (~$0.040)/kWh. Hence, MSEDCL accepted offers up to ₹3.30 (~$0.040)/kWh. Accordingly, the revised accepted offers stood as follows:

Commission’s analysis

The Commission noted that MSEDCL considered offers within the ceiling tariff of ₹3.30 (~$0.040)/kWh in the post-bidding process.

The Commission observed that the MSEDCL, in its two tenders for grid-scale solar power procurement, discovered tariffs in the range of ₹2.90 (~$0.035)/kWh-₹2.97 (~$0.036)/kWh.

MERC said that it was evident that the tariff considered for adoption was marginally higher than the resultant tariff of the interstate transmission system (ISTS)-connected solar projects.

But, under Component A of the PM-KUSUM program, MSEDCL will receive a procurement-based incentive from the Central government, which is ₹0.40 (~$0.004)/kWh or ₹660,000 (~$7,994)/MW of installed capacity, whichever is less for the first five years from the commercial operation date of the project.

Accordingly, the Commission deemed it fit to adopt and approve tariffs for 8.7 MW of solar projects on long-term basis (for 25 years) under Component-A of the PM-KUSUM program.

The state regulator noted that as against the bid capacity of 298 MW, only 8.7 MW bids had been received. Still, more quantum is required to fulfill the target of 500 MW set by MNRE and reduce the power purchase cost.

The Commission directed MSEDCL to make extra efforts to give adequate publicity to the program so that more bids are received. MSEDCL should focus on the area where barren land is available coupled with good availability of solar radiation throughout the year.

This will help MSEDCL increase the availability of land for implementing such solar projects and provide assured rental income to farmers, the commission added.

Last November, MERC allowed MSEDCL to procure 132.75 MW of solar power on a long-term basis at ₹3.10 (~$0.038)/kWh tariff.

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