CEA Asks States to Use 5-10% Biomass Pellets for Power Generation in Thermal Plants

The Maharashtra Electricity Regulatory Commission (MERC) has approved a petition filed by the Maharashtra State Electricity Distribution Company Limited (MSEDCL) for the long-term procurement of 50 MW of biomass power for a period of 20 years through competitive bidding.

MSEDCL had petitioned MERC to approve the competitive bidding process followed by an e-reverse auction for the procurement of 50 MW of biomass-based power and the same to be made eligible for meeting MSEDCL’s non-solar renewable purchase obligation (RPO) requirement.

MSEDCL had also requested the commission to approve the bid document; request for selection (RfS) and the power purchase agreement (PPA).

Moreover, MSEDCL had informed the MERC that it had been buying renewable energy certificates (RECs) instead of actual power to fulfill part of its RPO. Therefore, to fulfill the RPO compliance through sale and purchase of actual power and to meet the prescribed target, MSEDCL proposed to carry out competitive bidding for the procurement of 50 MW of biomass power on a long-term basis.

While examining the submissions made by MSEDCL, MERC observed that few of the documents deviated from the existing provisions. MSEDCL had provided for 20-year PPA period in comparison to the 13-year period prescribed by MERC, set a tariff ceiling of ₹5 (~$0.07078)/kWh when the commission had provided for ₹7.44 (~$0.10532)/kWh.

MSEDCL had proposed that the power cost be calculated as 50 percent fixed cost and 50 percent variable cost, while MERC had no such provision. MSEDCL made a provision that the use of fossil fuels will be limited to the extent of 15 percent of total fuel consumption on a monthly basis whereas the MERC had previously stated that the use of fossil fuels should be limited to the extent of 15 percent of the total fuel consumption on an annual basis, or to what may be stipulated by the Ministry of New and Renewable Energy (MNRE).

MERC, in its order, approved all the proposals made by the MSEDCL and approved the deviations and stated that such procurement will count towards MSEDCL’s non-solar RPO.

Recently, MERC also approved PPAs for grid-connected solar photovoltaic (PV) projects totaling 235 MW.