The Maharashtra Electricity Regulatory Commission (MERC) has approved the adoption of a tariff of ₹3.65 (~$0.0421)/kWh for Adani Electricity Mumbai (AEML-D) to procure 250 MW wind power from JSW Neo Energy for 25 years.

The Commission approved the tariff and directed AEML-D to finalize its power purchase agreement with JSW Neo Energy within 30 days.

Background

AEML-D filed a petition on September 27, 2024, citing the need to procure additional wind power to fulfill its renewable purchase obligation (RPO) and future electricity demand.

The company projected its peak demand to rise from 2,056 MW in the financial year (FY) 2025 to 2,196 MW by FY 2030, with a shortfall between 450 MW and 950 MW during evening peak hours.

The bidding process for this procurement commenced on February 29, 2024.

AEML-D received bids from three companies. JSW Neo Energy submitted the lowest bid at ₹3.78 (~$0.0436)/kWh, which was later negotiated to ₹3.65 (~$0.0421)/kWh.

The approved tariff was lower than the ₹3.60 (~$0.041) to ₹3.70 (~$0.042)/kWh range discovered by Solar Energy Corporation of India (SECI) auctions and below AEML-D’s long-term power purchase costs.

The petitioner argued that the procurement aligned with MERC’s RPO Regulations, 2024, which mandate wind targets of 0.67% to 3.48% between FY 2025 and FY 2030. AEML-D submitted that its existing wind power contracts were signed before March 31, 2024, making it ineligible for RPO compliance, necessitating new agreements.

It contended that the procurement supports compliance with the MERC (framework for resource adequacy) Regulations, 2024, which require planning to generate resources to ensure reliability.

Commission’s Analysis

MERC found the tariff of ₹3.65 (~$0.042/kWh to be reasonable, considering that SECI’s tariffs ranged from ₹3.60 (~$0.041) to ₹3.82 (~$0.044)/kWh, excluding trading margins, inter-state transmission charges, and losses, which would push the landed cost above ₹4 (~$0.046)/kWh.

The Commission observed that the petitioner’s procurement involves intrastate transmission generation, avoiding additional costs such as general network access charges.

MERC also noted that the petitioner’s bidding process was transparent and complied with the Ministry of Power’s guidelines.

The Commission acknowledged the anticipated increase in AEML-D’s power demand and the expiration of some existing contracts, which would create a supply gap.

Recently, MERC rejected the Captive Power Producers Association’s petition seeking amendments to existing open access regulations and allowing them to set up wind-solar-thermal hybrid power projects.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.