MSEDCL Approves Maharashtra’s Procurement Of 7,783 MW Solar Energy

MSEDCL Approves Maharashtra’s Procurement Of 7,783 MW Solar Energy. Photo: Pexels

Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) recently approved the procurement of 7783 MW on a long-term basis at a tariff of Rs 2.90 to 3.10/kWh from solar generators. The commission also allows MSEDCL to procure additional power up to 2000 MW under subsequent rounds of bidding under MSKVY 2.0 subject to the condition that the discovered tariff is within the same range of Rs 2.90 to 3.10/kWh with a weighted average tariff of Rs. 3.08/kWh.

According to the order, MSEDCL may issue LoA for a tariff lower than Rs 2.90/kWh if such a lower rate is discovered in the bidding process. After issuance of LoA, MSEDCL shall file an affidavit demonstrating the quantum of additional power procurement and how it has complied with conditions related to the discovered tariff.

Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) filed the present Petition on 1 March 2024 seeking approval for the adoption of tariff for long-term power procurement from 7783 MW solar projects under the MSKVY 2.0 Scheme discovered through a competitive bidding process.

The Maharashtra government (GoM) has planned and resolved to provide daytime electricity to agricultural consumers through decentralized solar power projects. To achieve this, the Industries, Energy and Labour Department, notified Mukhyamantri Saur Krushi Vahini Yojana 2.0 (MSKVY 2.0), under which at least 30% (thirty percent) of agricultural feeders are proposed to be solarized by December 2025.

The proposed procurement of energy through solar power will result in a reduction of the overall cost of power procurement for MSEDCL. Such reduction will, in turn, reduce the burden of cross-subsidy on industrial and commercial consumers. The bidders are also expected to obtain benefits of any Central and State Government schemes that may be available to them under the ‘Guidelines for Implementation of Pradhan
Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM) Scheme issued by the MNRE.

According to the tender document, the bidding process involved cluster-wise tenders and individual substation-based tenders. Cluster-wise tenders required bidders to bid for all substations within a cluster, while individual substation-based tenders allowed bidders to choose specific substations. The aim was to ensure competitive and reasonable tariffs aligned with market trends.

Under MSKVY 2.0, the government of Maharashtra plans to solarize at least 30% of agricultural feeders by December 2025, totaling approximately 7,000 MW. MSEDCL launched a competitive bidding process to procure 7,783 MW of solar power from these projects. The goal is to reduce the overall cost of power procurement for MSEDCL and alleviate the burden of cross-subsidy on industrial and commercial consumers.

A total of 21 clusters with a combined capacity of 3650 MW were made available for selection. The bidders were granted the liberty to choose from any of the clusters. The Cluster Tender also had a single-stage, double-envelope bidding process followed by
an e-reverse auction, read the order by MSEDCL.

Eventually, the Commission also noted that the said capacity of 7738 MW is higher than the capacity of around 7000 MW approved for bidding process by the Commission vide Order dated 11 August 2023. As this is distributed solar projects have their benefits such as reduction in distribution losses and deferment of investment in upstream infrastructure strengthening in addition to power being available at a tariff lower than the Average Power Purchase Cost of MSEDCL, the commission considers it appropriate to allow such higher procurement of power from such distributed solar projects.

Accordingly, in line with the mandate under Section 63 of the Electricity Act 2003, the Commission deemed it fit to adopt and approve tariff for
7738 MW cumulative Solar projects on long-term basis, stated MSEDCL order.