The Maharashtra State Electricity Distribution Corporation Limited (MSEDCL) has suggested revisions to the Maharashtra Electricity Regulatory Commission’s (MERC) draft regulations on renewable purchase obligations (RPO).
As reported previously by Mercom, the state has issued a draft policy announcing its renewable purchase obligation from 2020 to 2025. The solar RPO targets mentioned in the policy draft will start at 4.5%, going up to 13.5% over the next five years. It also mentions that the distribution companies will be subjected to a reduction in the annual revenue requirement at a rate of ₹0.10 (~$0.0014)/kWh for the shortfall in the total renewable power procurement target for each year.
In its letter, the MSEDCL stated that the commission’s proposal to revise the solar RPO target of 13.5% by 2024-25 was quite stiff and that despite efforts, it would not be able to achieve them.
A total solar capacity of 12,500 MW would be required by 2024-25 to achieve the target. Its current contracted solar capacity stands at 4,200 MW.
The distribution company (DISCOM) explained that these targets would be difficult to achieve because the competitive bidding process to expand capacity takes a significant amount of time, and there were many other factors beyond their control making these targets challenging to achieve.
It further added that DISCOMs should not be penalized for falling short of targets as it would impose an unnecessary burden on them and their consumers. The state DISCOM suggested that the regulation be amended so that DISCOMs are not be penalized for non-achievement of RPO targets until 2024-25.
The MSEDCL also noted that the draft regulations required DISCOMs to bear the infrastructure expenditure for renewable projects in remote areas that fall beyond the interconnection point. The regulations state that the licensee will be responsible for the development of evacuation infrastructure beyond this point.
The MSEDCL suggested the imposition of a ceiling for the maximum evacuation infrastructure cost per MW as these costs turn out to be high compared to the overall project cost in some cases. It recommended a limit of ₹2.5 million (~$35,196)/MW, subject to an overall ceiling of ₹10 million (~$140,784).
Earlier, the MERC approved the Maharashtra DISCOM’s request to procure an additional 300 MW capacity of solar power from the Energy Efficiency Services Limited (EESL).
Before this, Maharashtra had floated a tender for the long-term procurement of 1 GW of solar power to meet its RPO in June 2019. The ceiling tariff for that tender was set at ₹2.80 (~$0.038)/kWh.
Recently, Mercom reported that the MERC issued the draft version for its tariff determination regulation order for renewable projects that are commissioned for the generation and sale of electricity to distribution licensees in Maharashtra.
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. More articles from Nithin.