The Maharashtra Electricity Regulatory Commission (MERC) has authorized the Maharashtra State Power Generation Company Limited (MAHAGENCO) and the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to procure 250 MW of solar power at ₹2.51 (~$0.033)/kWh from TP Saurya, a subsidiary of Tata Power.

The Commission directed the parties to sign the power purchase agreement (PPA) and the power sale agreement (PSA) within 15 days. It also approved the trading margin of ₹0.07 (~$0.0009)/kWh as sought in the draft PSA.

The regulator said that the power procured from these projects would be eligible for fulfilling the renewable purchase obligation (RPO) of MSEDCL.

Earlier, MAHAGENCO and MSEDCL had filed a joint petition seeking approval of ₹2.51 (~$0.033)/kWh as the tariff along with a trading margin of ₹0.07 (~$0.0009)/kWh for long-term procurement of 250 MW of power from solar projects at the Dondaicha Solar Park in Dhule, Maharashtra.

Background

In 2018, MAHAGENCO, through the Solar Energy Corporation of India (SECI), decided to carry out the selection of solar power developers for the Phase-I of 250 MW capacity. Talettutayi Solar, Tata Power, and NTPC were declared the winners in the reverse auction. However, due to the delay in finalizing the PSA conditions between SECI and MSEDCL, and the refusal of bidders to extend the bid validity, SECI annulled the tender.

In January 2021, MAHAGENCO issued the tender afresh with a ceiling tariff of ₹2.83 (~$0.037)/kWh and a trading margin of ₹0.07 (~$0.0009)/kWh. MAHAGENCO was to act as an intermediary procurer between the developer and MSEDCL.

TP Saurya was declared the winner with a tariff of ₹2.51 (~$0.033)/kWh. MSEDCL consented to procure 250 MW of solar power at the discovered tariff and said that the Commission would decide on the trading margin.

MAHAGENCO, in its submission, said that it would be developing the 220/33 kV solar park pooling station as depository work through the Maharashtra State Electricity Transmission Company for which tendering had been completed. It added that the evacuation work would be completed within 15 months from the letter of award to the contractor.

Being the intermediary procurer for the 250 MW Dondaicha Solar Park, MAHAGENCO requested the approval of the trading margin of ₹0.07 (~$0.0009)/kWh as per the guidelines issued by the Ministry of New and Renewable Energy (MNRE).

Commission’s analysis

The Commission observed that MNRE, through its letter dated December 12, 2014, had approved the implementation of a program to set up at least 25 solar parks each with a capacity of 500 MW and above with a target of over 20,000 MW of solar power installed capacity in five years from FY 2014-15 to FY 2018-19.

Initially, MAHAGENCO envisaged the development of Dondaicha Solar Park with a capacity of 500 MW. Due to the non-availability of land and power evacuation constraints, it decided to execute the project in two phases with a capacity of 250 MW each. MNRE approved the reduction in the sanctioned capacity.

The Commission added that the tariff of ₹2.51 (~$0.033)/kWh was discovered through a transparent bidding process.

It observed that MAHAGENCO and MSEDCL had sought a deviation from the guidelines regarding the provisions relating to the payment security fund and state government guarantee.

The Commission said since there was a provision relating to the payment security fund in the draft PPA and PSA, it could not be deleted.

It also noted that the trading margin of ₹0.07 (~$0.0009)/kWh was allowed in the guidelines notified by the Ministry of Power and also stipulated in the draft bidding documents.

In June last year, MERC had approved a tariff of  ₹2.90 (~$0.04)/kWh for the long-term procurement of 350 MW of solar power by MSEDCL from 350 MW of grid-connected intrastate solar projects (Phase-V).

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