The Maharashtra Electricity Regulatory Commission (MERC) has given the green light for Maharashtra State Electricity Distribution Company (MSEDCL) to procure 1,468 MW of Firm and Dispatchable Renewable Energy from SJVN at a tariff of ₹4.45 (~$0.0529) and ₹4.46 (~$0.0531)/kWh.

The procurement will help MSEDCL meet its Renewable Purchase Obligation (RPO) requirements. The contracts will be for 25 years.

Background

MSEDCL sought approval for its renewable energy procurement strategy from SJVN’s grid-connected renewable energy power projects with energy storage systems. The petition was grounded in the need for long-term firm renewable power to meet increasing demand and fulfill RPO targets.

The petition detailed the steps taken by SJVN, which had floated a tender for 1,500 MW of FDRE power with an additional 1,500 MW option under the greenshoe clause. SJVN conducted a reverse auction on November 7, 2023, discovering tariffs of ₹4.38 (~$0.0521) and ₹4.39 (~$0.0522)/kWh.

MSEDCL gave in-principle consent for 2,368 MW procurement but later agreed to secure 1,468 MW after SJVN’s revision based on commitments to other distribution companies.

The procurement involves a combination of solar, wind, and energy storage systems, with an annual capacity utilization factor of approximately 72%, ensuring firm power availability during peak hours. The energy storage systems are expected to provide four hours of peak power supply daily with a minimum of 90% availability.

SJVN acted as an intermediary procurer and trader, charging a trading margin of ₹0.07 (~$0.0008)/kWh. The Central Electricity Regulatory Commission (CERC) had already adopted the tariffs discovered in the auction.

Commission’s Analysis

The MERC evaluated several aspects of the petition, focusing on the quantum of power procurement, the competitiveness of the proposed tariffs, the trading margin, and the availability of transmission corridors for power evacuation.

The Commission noted that MSEDCL’s proposed 1,468 MW procurement was justified based on the Central Electricity Authority’s Resource Adequacy Study and MSEDCL’s RPO compliance requirements. Given the growing demand and RPO trajectory outlined for Maharashtra, this procurement will help MSEDCL achieve its future solar and wind energy targets.

The Commission deemed the tariffs discovered through SJVN’s competitive bidding process to be competitive and aligned with market trends. As CERC already approved the tariffs, MERC’s scope was limited to approving the PSA with these rates. The cost is lower than peak power prices from other sources, making it a viable solution for MSEDCL’s requirements.

The Commission approved the trading margin of ₹0.07 (~$0.0008)/kWh, as specified in the competitive bidding guidelines. MSEDCL will pay SJVN this margin for acting as the intermediary procurer.

The Commission directed MSEDCL to prioritize transmission network strengthening and secure grid access to ensure smooth power flow from the FDRE projects.

In August, CERC adopted the tariff for 2,368 MW FDRE projects by SJVN. Haryana Power Purchase Centre had signed PSA for 800 MW and Noida Power Company for 100 MW.

Recently, MERC gave the green light for MSEDCL to procure an additional 5,991 MW of solar power through competitive bidding.

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