NEW DELHI: In a case that can set off a trend among states, the Maharashtra
power regulator
has cleared the decks for state distribution company (discom)
MSEDCL
's proposed combo offer to purchase 1,600 MW thermal and 5,000 MW
renewable power
from a single supplier, accepting the argument that this will serve consumer interest by lowering the effective procurement cost.
The tender in question was floated in March 2023, just before the model code for the Lok Sabha elections kicked in, as part of preparations to meet the projected demand in 2033-34. But the discom subsequently proposed several deviations in the standard bidding format and moved the regulator on June 25 for "urgent" approval.
The regulator questioned several aspects of the tender, notably why the changes were not incorporated before starting the bidding process and how the combined purchase of thermal and solar power will benefit consumers.
In its July 12 final order, the regulator accepted that awarding a combined bid with a weighted average tariff for thermal and solar projects will help achieve lower effective tariff since the entire capacity will be tied up in one process with an eligible bidder offering the lowest tariff.
The discom said the projects would be awarded based on the lowest weighted average tariff after reverse e-auction, during which the bidders are expected to lower tariffs quoted in their financial bid. The freedom to lower any tariff (solar or thermal) to become competitive will further encourage tariff reduction for success during the auction, directly benefiting consumers.
Separate power purchase agreements will be executed for solar and thermal projects. However, the aggregate power procurement will be complied in spirit even after that. Under the PPA, the developer has to ensure that the operations are maintained in a way that the weighted average tariff achieved for both projects is lower than the weighted average tariff calculated as per the formula used for evaluation.
In case of violation, the developer has to provide adequate compensation to bring down the weighted average tariff to the desired level.
Also, under a combined deal, developers have to complete the thermal and solar projects on time since failure in one can result in the termination of both PPAs, the discom said.
Other benefits of combined purchase listed by the discom include meeting renewable purchase and generation obligations and supporting generation companies in carbon mitigation.
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