MSEDCL Secures Approval for 1,052 MW Solar Power Procurement for Lift Irrigation Schemes

Summary

The Maharashtra Electricity Regulatory Commission (MERC), in its Order dated September 20, 2024, granted Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) approval for the long-term procurement of 1,052 MW of solar photovoltaic power for the lift irrigation schemes (LIS) in Maharashtra.[1] This solar power will be sourced from projects set up on lands provided by the Water Resource Department (WRD) of the Government of Maharashtra. The scheme aims to ensure reliable power supply for LIS consumers, reduce the subsidy burden on the government, and promote the use of renewable energy.

Case Timeline

• August 6, 2024: MSEDCL filed the petition seeking approval for the procurement of 1,052 MW of solar power.
• August 11, 2023: MERC approved bid documents for solarization of agricultural feeders under the Mukhyamantri Saur Krushi Vahini Yojana (MSKVY) 2.0.
• August 20, 2024: The first e-hearing took place, with the Commission directing MSEDCL to include WRD-GoM as a respondent.
• August 23, 2024: The Commission conducted a second hearing, where MSEDCL clarified that there were no further deviations from competitive bidding guidelines.
• September 20, 2024: MERC allowed MSEDCL to proceed with the competitive bidding process for the procurement of solar power.

Issue Raised

MSEDCL approached MERC seeking approval for the long-term procurement of 1,052 MW of solar photovoltaic power. The power is to be generated by projects installed on lands owned by the WRD of Maharashtra to provide electricity to LIS consumers. MSEDCL also requested to adopt a revenue-neutral model and establish a ceiling tariff of Rs. 0.90/kWh for this solar power procurement.

Appellant’s Arguments

MSEDCL, represented by Advocate Ms. Deepa Chawan and Mr. Lokesh Chandra, argued:

1. The scheme is in line with the Government of Maharashtra’s efforts to provide daytime electricity to agricultural consumers through decentralized solar power projects under MSKVY 2.0.
2. The solarization of LIS was not covered under the existing MSKVY scheme, hence the need for a new tender for procuring 1,052 MW of solar power specifically for LIS consumers.
3. The project would use lands provided by the WRD, and the solar power generated would offset the current subsidy burden and reduce dependency on conventional power sources.
4. MSEDCL sought financial assistance of Rs. 320 Lakhs per MW for solar capacity, which would be disbursed in accordance with milestones.
5. MSEDCL also emphasized the adoption of a revenue-neutral model designed to offset any power purchase costs for supplying power to LIS consumers during non-solar hours.

Respondent’s Arguments

WRD-GoM, represented by Mr. M.J. Naik, did not present specific arguments in the document, but the department’s role was central to providing land for the solar projects and facilitating implementation.

Order

The Commission allowed MSEDCL to proceed with the competitive bidding process for the procurement of 1,052 MW of solar power. The approval was granted under Regulation 39(c) of MERC’s Transaction of Business and Fees and Charges Regulations, 2022, as well as MERC’s Renewable Purchase Obligation (RPO) Regulations. The Commission also noted that no additional deviations from the competitive bidding guidelines were being sought by MSEDCL.

The Commission acknowledged that the proposed procurement would help MSEDCL meet its RPO obligations and benefit both MSEDCL and the Government of Maharashtra. However, the Commission clarified that it did not delve into the specific merits or implications of the proposed modalities for supplying power to LIS consumers and reserved such analysis for an appropriate future proceeding.

Analysis

The MERC’s decision to approve MSEDCL’s petition to procure 1,052 MW of solar power represents a bold move toward renewable energy adoption in the state’s irrigation sector. The scheme aligns with the government’s goals of reducing dependency on conventional power sources and minimizing carbon emissions.

The project has multiple benefits:

• Financial Relief for the Government: Solar power procurement aims to reduce the subsidy burden on the Government of Maharashtra, as it targets providing cost-effective electricity to LIS consumers through a sustainable model.
• Carbon Footprint Reduction: By moving towards solar energy, the project contributes to the reduction of greenhouse gas emissions, which is crucial for mitigating climate change impacts.
• Revenue-Neutral Model: The proposed model ensures that the financial interests of MSEDCL and consumers are not adversely impacted. By designing solar capacity to generate excess power during the day, MSEDCL aims to compensate for increased power purchase costs during non-solar hours.
• Land Utilization: The use of lands provided by WRD, including submerged lands, reduces one of the key hurdles in solar power project implementation—land availability.

Despite these benefits, the Commission’s judgment points to some concerns that remain unresolved. Specifically, the Commission noted that it had not analyzed the specific modalities and implications of the power supply mechanism to LIS consumers. This suggests potential challenges related to balancing solar and non-solar power supply, ensuring financial viability, and operationalizing the project in line with consumer interests.

The decision to proceed with competitive bidding without further deviation from previously approved guidelines emphasizes the Commission’s cautious approach to adhering to existing regulations while enabling innovative solutions. The involvement of WRD-GoM as a key respondent also reflects the importance of multi-departmental collaboration for successful project implementation.

[1] https://merc.gov.in/wp-content/uploads/2024/09/Order-in-Case-No.-122-of-2024.pdf