The Maharashtra Electricity Regulatory Commission (MERC) issued an order directing the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to purchase power from a 50 MW of bagasse-based co-generation projects at rates discovered through competitive bidding after the expiry of their energy purchase agreements (EPA).
The MSEDCL had filed a petition seeking the approval for the long-term procurement of power from these projects whose 13 year-long EPAs had expired or are going to expire. The procurement of this power would help the MSEDCL meet its non-solar RPO targets.
In its petition, the MSEDCL stated that out of total contracted capacity, bagasse-based co-generation projects contribute 35% towards the fulfillment of its RPO target. MSEDCL has been purchasing power from bagasse-based co-generation projects at a preferential tariff, which is higher when compared to the average power purchase cost. Now, after the completion of 13 years of the EPA period, these projects have recovered their capital cost and are ready to supply power at ₹3.56 (~$0.04)/kWh for the remaining useful life of the project.
The state body temporarily allowed a rate of ₹3.56 (~$0.04)/kWh for the rest of the 2019-20 financial year but directed the MSEDLC to conduct a fresh bidding process after the expiry of the existing EPAs, starting from April 1, 2020.
The MERC added that going forward, the competitive bidding process for such projects must be started well in advance so that the new EPAs can be signed before the starting of the next crushing season.
Additionally, the commission allowed for the power procured from these projects to be used for the fulfillment of MSEDCL’s non-solar renewable purchase obligations.
Earlier this year, in May 2019, MSEDCL had sought the approval of the commission to procure power from two bagasse-based cogeneration projects at ₹3.56 (~$0.05)/kWh. The 13-year energy purchase agreements for these projects had expired in FY 2018-19. In that order as well, the commission had directed MSEDCL that the procurement of power from such projects will be through a competitive bidding process, and the sale and purchase made under the interim arrangement should be adjusted with the rate discovered through the competitive bidding process.
Earlier, in a similar ruling, the MERC approved the long-term procurement of 50 MW bagasse-based co-generation power by the MSEDCL. It also allowed the MSEDCL to delete the clauses of performance guarantee and financial closure from the earlier approved Request for Selection (RfS) and power purchase agreement.
Just a few weeks earlier, Mercom reported that the MSEDCL invited RfS for the procurement of 50 MW of power generated from similar projects in the state.
Image credit: Jonathan Wilkins [CC BY-SA 3.0]
Nithin 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.