Regulator Approves Tariff For 133 MW Of Solar Power Under KUSUM Program

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The Maharashtra Electricity Regulatory Commission (MERC) recently allowed Maharashtra State Electricity Distribution Company (MSEDCL) to procure 132.75 MW of solar power on a long-term basis at ₹3.10 (~$0.038)/kWh tariff.

The Commission added that the solar power procured from these projects would be eligible to fulfill MSEDCL’s solar renewable purchase obligation (RPO) for the respective periods.

MSEDCL’s procurement is from the solar capacity installed under Component-A of the Pradhan Mantri Kisan Urja Suraksha Evam Uthhan Mahabhiyan (KUSUM) program, which allows the setting-up of distributed generation capacity ranging from 0.5-2 MW.

The program allows participation from farmers, groups of farmers, cooperatives, panchayats, Farmer Producer Organizations, and Water User Associations.


Under the program, the Ministry of New and Renewable Energy (MNRE) will provide MSEDCL with a procurement-based incentive for five years, amounting to ₹0.40 ($0.0049)/kWh and ₹6.6 lakh ($8151)/MW of installed capacity, whichever is less.

Background

In 2021, MNRE allocated 500 MW of solar power to MSEDCL under Component-A of the KUSUM program for FY21.

MSEDCL floated a tender to procure 500 MW but could only allot about 69 MW to the qualified bidders due to a tepid response from the participants.

The state distribution company then reissued the tender for the balance capacity of 431 MW with a ceiling tariff of ₹3.10 (~$0.038)/kWh.

A total of 27 bids were received, totaling 139.25 MW. Financial bids for 22 qualified bidders were opened in July.

Commission’s analysis

MSEDCL had received bids for only 132.75 MW against a tender of 431 MW. The Commission noted that more capacity was required to fulfill the target of 500 MW set by MNRE and reduce the power purchase cost.

The state regulator suggested that MSEDCL focus on available barren land coupled with good availability of solar irradiation throughout the year. This will not only help MSEDCL increase the availability of land for such solar projects but also provide assured rental income to farmers.

In February this year, MERC approved the procurement of 12.5 MW of solar power by MSEDCL under Component A of the PM-KUSUM program.

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