MERC Approves Tariffs For a Combined 633 MW of Solar Power in Maharashtra

Last Week for a busy week for Maharashtra, with approvals for close to 633 MW of solar power procurement to meet Maharashtra State Electricity Distribution Company Limited (MSEDCL’s) Renewable Purchase Obligations (RPO) for the state. MSEDCL, which has been procuring just about 3.5 percent of its power requirements from Solar, needs to ramp it up to 12.5 percent  by 2024-25.

The MSEDCL had originally looked to procure 500 MW of solar power, but after a poor response to its tender, with only 350 MW offered up, it filed a petition with the Commission accordingly. Seeking a tariff for the long-term (25 years) procurement of 350 MW of grid-connected intrastate solar projects (Phase-V). Bringing to a close the tender floated in December 2019.

MSEDCL is falling short of its RPO targets by 3,486 million units (MU) until FY 2018-19 when the target was only 3.5%.

Tata Power Renewable Energy Limited with its bid for 100 MW at Rs 2.90, and Avaada Energy Private Limited with its own 250 MW bid at Rs 2.90 thus got the bids. The commission did not that the prices were probably a little higher die to the condition of Intrastate projects, as opposed to interstate projects. The previous approved rate under its Phase IV program had been Rs 2.89.

Moving to the other set of approvals, this was given for the ambitious plan for long Term Procurement of power from small developers  under the ‘Mukhyamantri Saur Krishi Vahini Yojana’ for 2 to 10 MW Capacity Projects. MSEDCL had filed a petition on on 22 April 2020 seeking approval for Adoption of Tariff for Long Term Procurement of 283 MW Power under ‘Mukhyamantri Saur Krishi Vahini Yojana’ from 2 MW to 10 MW Capacity Projects connected to Distribution Network. MSEDCL had also sought approval MSEDCL to the RfS and PPA document floated for the 1350 MW tender under ‘Mukhyamantri Saur Krishi Vahini Yojana’.

In this case, a previous tender in 2019 had failed miserably, with just 5 MW of bids received, due to primarily the low ceiling price of Rs 3.15 kWh. Accordingly MERC had acknowledged the issue in it order on December 19, 2019, and allowed  an increase in the ceiling price to Rs 3.30 kWh. Fresh district wise tenders, 30 in all, were duly issued  by MSEDCL on 31 December 2019 and 1 January 2020 to procure solar power through competitive bidding with revised ceiling rate of Rs. 3.30 per unit.

After just 45 MW of total bids initially from 3 districts, two more extensions followed, before the discom finally had bids totaling upto 45+ 238, or 283 MW.  At the ceiling price and a paise below,from a total of 37 bidders.

The approvals, driven primarily by the need to meet the state’s RPO, are a good sign, and point to the possibilities that lie ahead for the industry as the amendments to the Electricity act get closer to passing. Since that would make RPO obligations even more pressing for discoms, as missing them could prove to be an expensive proposition for most.