The Maharashtra Electricity Regulatory Commission (MERC) has approved tariff ranging between ₹3.28 (~$0.0436)/kWh to ₹3.30 (~$0.0439)/kWh for the procurement of power from 283 MW of solar projects by the Maharashtra State Electricity Distribution Company Limited (MSEDCL).
In April, the MSEDCL had filed a petition seeking approval for the adoption of tariffs for the long-term (25 years) procurement of power from 283 MW of projects under the Mukhyamantri Saur Krishi Vahini Yojana (MSKVY) program. Individual projects ranged between 2 MW and 10 MW in capacity and were connected to the distribution network.
The distribution company (DISCOM) also wanted the Commission’s approval to use this power to meet its solar renewable purchase obligation (RPO) targets as it was falling short by 3,468 million units (MU).
Additionally, it requested the Commission to approve the request for selection (RfS) and the power purchase agreement (PPA) documents for a 1.35 GW tender it had floated under the same program.
Originally floated in September 2019, these tenders were put on hold because of the Maharashtra Legislative Assembly elections in October as developers wanted to wait for the election results to gauge the policy commitment of the winning party before participating in the tenders. The tariff ceiling for this tender was set at ₹3.14 (~$0.044)/kWh. The auction later received a poor response with a single bid of 5 MW.
After this, the MSEDCL revisited the tariff calculation. Considering the piling renewable purchase obligation (RPO), it revised the ceiling tariff to ₹3.30 (~$0.0439) and reissued this tender. It only received bids for 45 MW of projects initially with tariffs ranging between ₹3.28 (~$0.0436)/kWh and ₹3.29 (~$0.0437)/kWh. Subsequently, it extended the bid submission deadline for these projects and received additional bids from 22 bidders for 238 MW with tariffs ranging between ₹3.29 (~$0.0437)/kWh and ₹3.30 (~$0.0439)/kWh.
Earlier, the Commission had allowed the MSEDCL to revise its ceiling tariff to ₹3.30 (~$0.0439)/kWh from ₹3.15 (~$0.0419)/kWh to improve responses and the success of the bid. It noted that despite increasing the tariffs, bids were only received for 283 MW and that any losses arising from this would be borne by the bidder as the bids received were within the ceiling rate defined by MSEDCL.
In conclusion, the Commission noted that the MSEDCL was transparent in conducting the competitive bidding process for the procurement of solar power and approved the adoption of tariffs for the 283 MW of solar power.
The MERC, in its order, also stated that the solar power procured from these projects could be used towards the fulfillment of the MSEDCL’s solar RPO targets for the respective periods.
Maharashtra has been behind on its RPO compliance and recently filed a petition before the MERC against its new RPO regulations, asking it to not levy penalty on non-compliance of standalone annual targets and cumulative targets of RPO until 2022-23.
Recently, the MERC approved a tariff of ₹2.90 (~$0.0385)/kWh for the long-term procurement of 350 MW of solar power by MSEDCL.
Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.