The Maharashtra Electricity Regulatory Commission (MERC) has approved Adani Electricity Mumbai Limited’s (AEML-D) deviations to procure 1,500 MW of power from renewable and non-renewable sources.

The Commission directed AEML to modify the bid documents.

Background

AEML-D filed a petition before MERC to approve deviations in the long-term procurement of 1,500 MW of power from grid-connected renewable energy and round-the-clock projects.

MERC had approved the tender for procurement of 1,000 MW of power from grid-connected renewable energy projects complemented by non-renewable energy sources.

The Commission had also extended the power purchase agreement (PPA) between AEML-D and Adani Dhanu Thermal Power Station (ADTPS) to procure 500 MW power until October 15, 2024, or until the commissioning date of the project.

The Commission allowed the following deviations:

• Determining the delivery point at the Maharashtra state transmission utility (STU) periphery instead of the central transmission utility (CTU) interconnection point.
• Removing the provision for payment of security funds and state government guarantees.
• Quoting the variable components of non-renewable energy project power on bid submission instead of the commissioning date.
• Reducing the PPA term to 10 years instead of 25 years.

However, the tender did not receive any bids because of lower PPA tenure, higher availability requirements, and a mandatory 51% renewable energy power supply as the reasons.

AEML-D proposed the following deviations to make the tender terms more attractive:

• The PPA term will be extended by additional 10 years at the sole discretion of AEML-D.
• Power will be supplied annually and at peak hours at 80% instead of 90% (except for March, April, May, June, September, and October, where power should be at least 50%).
• AEML-D will consider a gradual increase in mandatory renewable energy supply. Instead of over 50% mandatory supply, it will be over 30% in the first contract year, over 40% in the second contract year, and over 51% in the third contract year.
• Provision of change in location and RTC configuration/rated capacity will be considered up to the third contract year instead of 30 days from the letter of award.
• Sale of excess energy (more than 80% mandate) to a third party or power exchange will be permitted.
• Projects already commissioned without a long-term PPA and selling power on a short-term or merchant plant basis will be considered for participation.
• If either solar or wind projects are commissioned individually, the projects will be commissioned at 100% of the applicable tariff instead of at 50%.
• Trading licensees will also be allowed to participate in the bidding process.

The PPA between AEML-D and ADTPS would be valid until March 31, 2025. AEML-D proposed to extend the agreement period up to May 25, 2027, to avoid any power deficit.

Subsequently, AEML-D decided to disinvest in ADTPS. If the Commission extended the PPA period, AEML-D would sign the new PPA with the latest constituted company.

First Interlocutory Application

On November 11, 2024, AEML-D filed an interlocutory application for urgent listing of the petition, arguing that an approval postponement could delay the bidding process and the project’s commissioning, hurting the customers.

AEML-D would need to procure power from alternative sources since its PPA with ADPTS would expire on March 31, 2025,

Second Interlocutory Application

AEML-D filed a second interlocutory application seeking permission to procure power from alternative sources after the expiry of the PPA term.

AEML-D requested the Commission to reject its earlier plea to extend the PPA term until 2027 and instead allow it to procure power from alternative sources until the actual commissioning of the project.

However, Adani Power (APL) refused to extend the existing PPA.

Noting the implications of alternative power sourcing on reliable and unconstrained power supply in Mumbai’s suburban areas, the Commission asked AEML-D to provide a detailed submission on the issue.

AEML-D’s Submissions

AEML-D argued that it had already initiated a competitive bidding process for procuring 500 MW power on a medium-term basis and could choose long-term procurement based on additional requirements.

It added that the STU and CTU have been strengthening their transmission systems to meet Mumbai’s power demand even if the injected power from distributed sources is reduced or unavailable.

In a recent petition, the Brihanmumbai Electric Supply and Transport had also stated that the commissioning of 400 kV Vikhroli and 400 kV Navi Mumbai increased Mumbai’s transmission capacity.

AEML-D also submitted that there is sufficient power availability in the short-term market and RTC prices were decreasing.

It added that power from an intra-state developer would be cheaper due to non-applicability on inter-state transmission charges and losses.

AEML-D said Mumbai’s power supply would not be affected and would be supplied at competitive prices.

Commission’s Analysis

The Commission approved the deviations sought by AEML-D. However, it directed AEML-D to incorporate the several changes in the bid documents.

AEML-D must sign a PPA with Adani Power to procure 500 MW from ADTPS on the same conditions as the previous PPA between April 1, 2025, and March 31, 2030.

Adani Power must file the revised petition, including an annual revenue requirement (ARR) and tariff projections for the next control period, i.e., financial years (FY) 2026 to 2030.

AEML-D must revise its ARR projections and tariff for the FY 2026 to 2030 control period, considering the extended PPA with ADTPS.

AEML-D must seek prior approval from the Commission before exercising the greenshoe option under procurement.

In September 2024, MERC adopted a weighted average tariff of ₹4.08 (~$0.049)/kWh for Maharashtra State Electricity Distribution Company’s composite tender to procure 1,600 MW of thermal and 5,000 MW of solar power.

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