The Maharashtra Electricity Regulatory Commission (MERC) has given its approval to Tata Power Company Limited-Distribution (TPC-D) to procure 150 MW of power on a long-term basis from solar projects at a tariff of ₹2.83 ($0.039)/kWh.

The commission has given Tata Power the permission to go ahead and enter into an energy purchase agreement with the successful bidder for a period of 25 years.

The commission has added that the solar power procured from the supplier will be considered for meeting the solar renewable purchase obligation (RPO) requirements of Tata Power Distribution.

Background

The 150 MW solar tender was floated by TPC-D on August 21, 2019, and the initial date of submission of bids was extended from September 16, 2019, to September 25, 2019. Four bidders, including ReNew Power, Tata Power Renewable Energy Limited (TPREL), Azure Power, and Avaada Energy Private Limited were the interested bidders. After the pre-bid meeting for this tender, Tata Power modified some of the conditions in the bid document approved by the commission to ensure better participation by the bidders.

The tender received two bid submissions for 150 MW each by Avaada Energy Private Limited and Tata Power Renewable Energy Limited (TPREL). As the tender attracted the minimum number of bidders, Tata Power went ahead with the bidding process. Both the bidders qualified technically and were eligible for the financial bid opening and e-reverse auction.

After the reverse auction, TPREL emerged as the winner, and a Letter of Award (LoA) was issued to it for project development.

The commission ruled that Tata Power should fix the ceiling rate after its due diligence and the prevailing market conditions. The commission also added that these projects would be eligible for the fulfillment of the company’s solar RPO.

The commission further noted that TPC-D had conducted a transparent process of competitive bidding for the procurement of solar power and discovered a tariff of ₹2.83 ($0.039)/kWh which is slightly higher than the rates earlier approved by the commission for MSEDCL, that was ₹2.72 ($0.038)/kWh. However, those adopted rates were before the imposition of safeguard duty, and therefore, they were eligible for a “Change in Law” compensation under the PPA.

“If such an impact is incorporated in the Change in Law on the earlier adopted solar power rate, then the present discovered tariff of ₹2.83 ($0.039)/kWh looks comparable. In the present case, after considering market dynamics in the solar industry, particularly due to the exchange rate variation, the rate discovered by TPC-D seems to be comparable with the market trends,” the state order stated.

Earlier this year, the commission had ordered that the Maharashtra DISCOM should reduce ₹0.18 (0.0025/kWh) from the discovered tariff if the bidders have not paid safeguard duty.

Shortly before this order, the MERC ruled that the Ministry of Finance’s notification that imposed safeguard duty is an event of Change in Law, and therefore the additional expenditure and other impacts will be considered for reimbursement under Change in Law.