MERC Approves 1,600 MW Thermal, 5,000 MW Solar Projects For Maharashtra

Posted On - 3 August, 2024 • By - King Stubb & Kasiva

Summary

Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) filed a petition with the Maharashtra Electricity Regulatory Commission (MERC) seeking approval for deviations in the Standard Bidding Documents (SBDs) for the procurement of 1600 MW of thermal power and 5000 MW of solar power. MSEDCL proposed procuring this power through a combined bidding process, where a single entity would be awarded both the thermal and solar power projects based on a weighted average tariff. The MERC considered the petition and issued an order addressing the various issues raised.[1]

Case Timeline

  • 13 June 2024: MSEDCL filed the petition (Case No. 96 of 2024) and an Interlocutory Application (No. 28 of 2024) for urgent listing.
  • 25 June 2024: An e-hearing was held where MSEDCL explained the proposed procurement scheme. The MERC sought clarification and directed MSEDCL to file a submission.
  • 28 June 2024: MSEDCL filed an additional submission.
  • 2 July 2024: Another e-hearing was held where MSEDCL’s advocate presented the rationale for the procurement.
  • 12 July 2024: The MERC issued its order.

Issues Raised

  1. Whether the quantum of power procurement proposed by MSEDCL is justified.
  2. Whether the deviations sought from competitive bidding guidelines by MSEDCL are justified.
  3. Justification for the composite bid structure.
  4. Considerations for attenuating transmission constraints.

Appellant’s Arguments and Respondent’s Arguments

  • MSEDCL’s Arguments:
    • The proposed power procurement is based on a resource adequacy study and projections made by the Central Electricity Authority (CEA).
    • The combined procurement of thermal and solar power is an innovative approach that will help MSEDCL meet its Renewable Purchase Obligations (RPO) and reduce its average power purchase cost.
    • The deviations from the standard bidding documents are necessary to attract more bidders, increase competition, and ensure the timely and efficient completion of the projects.
    • MSEDCL is working in close coordination with the Maharashtra State Electricity Transmission Co. Ltd. (MSETCL) to address transmission constraints.
  • Respondent’s Arguments:
    • No specific respondent is identified in the case. However, the MERC, in its analysis, raises concerns about the deviations from the standard bidding documents and the potential for stranded capacity.

Order

  • The MERC partly allowed the petition.
  • It granted in-principle approval for initiating the procurement process for 6600 MW of power.
  • The deviations in the RFQ, RFP, and PSA for thermal power procurement were approved, subject to certain observations.
  • MSEDCL was directed to approach the Appropriate Government for approval of deviations in the guidelines for solar power procurement.
  • MSEDCL was instructed to reassess the transmission corridor availability issue in consultation with MSETCL.

Analysis

The MERC’s order reflects a balanced approach, acknowledging the need for additional power procurement to meet the growing demand in Maharashtra while also ensuring compliance with regulations and addressing potential challenges like transmission constraints. The approval of the combined bidding process for thermal and solar power is a notable decision, recognizing the potential benefits of this innovative approach in reducing costs and meeting RPO targets. However, the MERC’s cautious approach is evident in its requirement for MSEDCL to seek approval for deviations in solar power procurement and to reassess transmission availability. This highlights the regulatory body’s commitment to ensuring a fair and transparent bidding process while also safeguarding consumer interests.

[1] https://merc.gov.in/wp-content/uploads/2024/07/Order-in-Case-No.-96-of-2024.pdf