The Maharashtra State Electricity Distribution Co. Ltd (MSEDCL) has issued a tender to procure 500 MW of solar power.

The MSEDCL will enter into power purchase agreements (PPAs) with the successful bidders after conducting a reverse e-auction, and subsequently, the DISCOM will enter into a 25-year power purchase agreement.

According to MSEDCL, through this tender, it is looking to achieve its renewable purchase obligation (RPO) along with meeting its future power demand sustainably.

The state DISCOM has set a tariff ceiling of ₹2.80 ($0.038)/kWh.

The earnest money deposit has been set at ₹500,000 ($6,950)/MW. Further, the bidders are also expected to submit a performance bank guarantee of ₹1.4 million ($19,457)/MW. The projects are to be commissioned within 15 months from the date of execution of the PPA for projects set up in solar parks, and within 18 months from the date of execution of the PPA, for projects being set up outside of solar parks.

The pre-bid meeting for this tender will be held in Mumbai on September 4, 2019, and the last date of submission of bids is September 16, 2019.

Tariff cap in reverse auctions has been a major problem for the sector as developers are very reluctant to participate in auctions where tariffs can only go in the downward direction.

The Maharashtra Electricity Regulatory Commission (MERC) has been reluctant to approve tariffs above ₹3 ($0.040)/kWh. Earlier this month, the commission dismissed a petition filed by MSEDCL seeking the approval of tariff for 1,170 MW of solar projects to be set up under the Mukhyamantri Saur Krishi Vahini Yojana. The MSEDCL in its petition had requested for the adoption of tariff in the range of ₹3.16 (~$0.045)/kWh to ₹3.30 (~$0.046)/kWh. The tariffs were discovered in the competitive bidding process for a cumulative capacity of 1,170 MW of solar power projects in order to meet the DISCOM’s solar RPO.

The state has been struggling to meet its solar and non-solar RPO and had earlier invited potential bidders for the procurement of 500 MW of wind power on a long-term basis for eight years at a ceiling tariff of ₹2.52 ($ 0.036)/kWh.

Before this tender, Maharashtra had floated a tender for the long-term procurement of 1 GW of solar power to meet its RPO in June 2019. The ceiling tariff for that tender was also set at ₹2.80 ($0.038)/kWh.