Green Outlook

Maharashtra moves in the right direction

By Khushboo Goyal

In Maharashtra, 149,761 MUs of energy demand was recorded in 2017-18, the highest among all states in the country. To cater to this demand, the state has significantly improved its power supply situation in the past few years. Maharashtra reported an energy deficit of only 0.2 per cent in 2017-18, a testimony to the resolution of the state’s demand-supply mismatch problem. The state authorities are focusing on increasing energy generation, particularly from renewable energy sources. In fact, the total energy generated in the state grew by 5.26 per cent from 2016-17 to 2017-18. Maharashtra also has the highest installed power capacity (43 GW as of June 2018) in the country.

Out of the total installed power capacity, roughly 71 per cent or 30.5 GW is contributed by thermal sources of power, 19.3 per cent by renewable energy and the remaining capacity comes from large hydro and nuclear power. The renewable energy capacity in Maharashtra has increased by an impressive 7.8 per cent, from 7.7 GW in June 2017 to 8.3 GW in June 2018, which is the third highest installed renewable capacity in the country after Karnataka and Tamil Nadu. The state government is laying strong emphasis on the greater uptake of renewables as seen in the recent solar and wind auctions conducted by the state discom, and the new initiatives for promoting solar irrigation and rooftop solar.

Solar on the rise

While Maharashtra’s solar energy potential of 64 GW peak is among the highest in the country, the state was a late mover in the solar energy segment, unlike other states with a large solar potential such as Rajasthan, Gujarat, Andhra Pradesh, Tamil Nadu and Telangana. As a result, only 1,017 MW of solar power has been installed as of March 2018, against the targeted capacity of 11,926 MW till 2022. However, many believe that this delay has proven to be in the state’s favour, which is now leveraging the declining solar power prices to meet its target capacity. More than 50 per cent of the total solar capacity in the state has been installed after March 2017.

Utility-scale solar: While Maharashtra has been able to meet its overall renewable purchase obligation (RPO) targets over the years, it has fallen short of achieving its solar RPO targets time and again. To overcome this shortfall, several auctions have been conducted in the state. With the upcoming capacity, the state might be in a position to achieve its solar RPO targets.

Maharashtra State Electricity Distribution Company Limited (MSEDCL), for instance, held an auction for 1 GW of solar projects in December 2017. However, due to limited response, the capacity was retendered in April 2018. The retendered capacity was oversubscribed by 450 MW, on account of recent clarifications from the government on the new duties to be levied. The lowest tariff of Rs 2.71 per kWh was quoted by JLTM Energy India Private Limited and Mahoba Solar (UP) Private Limited (Adani). The other winners, ReNew Power, ACME Solar Holdings, Tata Power Renewable Energy Limited and Azure Power, quoted a tariff of Rs 2.72 per kWh. The tariffs quoted in this auction were lower than those discovered in NTPC’s recent 750 MW solar auction, a deviation from the usual trend as NTPC’s perceived financial risks are lower.

MSEDCL has also recently floated a tender for 1 GW of solar projects to be developed under the Mukhyamantri Saur Krushi Vahini Yojana. Meanwhile, expressions of interest have been invited from prospective solar project developers to set up a 1 GW floating solar photovoltaic (PV) project on the Ujjani Dam reservoir in Solapur.

Solar irrigation: Maharashtra has launched the Mukhyamantri Saur Krushi Vahini Yojana. Under this scheme, agricultural feeders will be powered through solar energy instead of distributing solar pumps to farmers. The scheme aims to provide power to farmers as and when required and not for a limited time period. Dr Vipin Sharma, director general, Maharashtra Energy Development Agency, explains, “There is a huge non-performing asset base in the form of 4.4 million (approximately) agricultural feeders in the state due to non-payment to discoms. This scheme serves the dual purpose of providing quality power supply to farmers as well as reducing the burden on discoms by powering agricultural feeders through solar.”

Solar parks: Three solar parks of 500 MW each have been sanctioned in Maharashtra, of which the Dondaicha Solar Park is being developed by Maharashtra State Electricity Generating Company Limited, while the Sai Guru Solar Park and the Patoda Solar Park are being developed by private companies Sai Guru Mega Solar Park Private Limited and Paramount Solar Power Private Limited respectively. However, the development of these solar parks has been slow. According to Sharma, “Solar parks are complicated to develop and implement due to land availability and power evacuation issues, as well as delays in getting approvals. Also, unlike the previous schemes of the Ministry of New and Renewable Energy (MNRE), its new solar parks scheme does not direct discoms to buy 20 per cent of the power generated in solar parks. Hence, a solar park is on its own as far as competitive bidding for its product is concerned.”

Rooftop solar: Maharashtra has emerged as a leader in the rooftop solar space, leaving behind the states of Tamil Nadu, Rajasthan and Karnataka. More than 75 per cent of the total solar rooftop projects in the state have been installed for the industrial consumer segment as per an analysis by BRIDGE TO INDIA, while the residential consumer segment has not been active in rooftop solar uptake. Explaining the challenges faced in rooftop solar development, Sharma remarks “There is an inherent reluctance on the part of discoms to offer net metering easily even when commercial and industrial consumers wish to go for grid-connected rooftop solar. At the same time, availability of rooftops is a basic constraint for the domestic rooftop programme, particularly in housing societies where the choice to install solar plants on rooftops (a common property) lies with the entire society and not a few willing participants.”

 Renewed focus on wind

Among all the states, Maharashtra has the third highest wind power potential of 45 GW, of which it has been able to develop only 4.8 GW. Due to high feed-in tariffs (Rs 3.82-Rs 5.56 per kWh) and zone-based tariffs in favour of developers, capacity addition remained high initially. However, policy uncertainties and transmission constraints slowed down project development. Less than 200 MW of capacity has been added since 2016 (120 MW in 2016-17 and 13 MW in 2017-18) as the state discoms did not sign any new power purchase agreements. Going forward, with the recent wind auctions conducted by MSEDCL, the situation is expected to improve.

MSEDCL’s recent 500 MW wind capacity auction to fulfil its non-solar RPO saw the lowest quoted tariff of Rs 2.85 per kWh. This was 17 per cent higher than the bid price of Rs 2.44 per kWh received in the 2 GW Tranche III of the Solar Energy Corporation of India auction. Adani Green Energy and KCT Renewable Energy Private Limited quoted the L1 tariff of Rs 2.85 per kWh, while the other winners, Inox Wind, Mytrah Energy and Hero Wind Energy Private Limited, quoted a tariff of Rs 2.86 per kWh. Right after the first auction of March 2018, MSEDCL announced its second wind tender for 250 MW of capacity in April 2018. The Maharashtra Electricity Regulatory Commission (MERC) has recently approved the tariff of Rs 2.52 per kWh proposed by MSEDCL for the short-term procurement of wind power under this tender.

New regulations

In view of increasing renewable energy integration into the grid, MERC issued final regulations for forecasting, scheduling, and deviation settlement of wind and solar power generation in the state, in July 2018. As per the regulations, solar and wind developers are liable to pay deviation charges for overinjection as well as underinjection of power into the grid. In June 2018, another clarification was issued by MERC stating that the simultaneous use of net metering and open access is not permitted to generators, and net metering benefits are limited to capacities of up to 1 MW. Another recent ruling by MERC clarifies that short-term and medium-term open access in the existing distribution system will be granted only if the resultant power flow can be accommodated. These recent developments mark the evolution of the state’s renewable sector towards a more mature market with forward-looking regulations to avoid complications in the future.

The way forward

Maharashtra has been allotted targets of 11,926 MW for solar power, 7,600 MW for wind, 50 MW for small-hydro and 2,469 MW for biomass-based power by the MNRE. With a small percentage of the targeted capacity installed till date, the state needs to adopt a fast-paced strategy to get maximum benefits of the state’s high renewable potential. The state is planning to make significant investments in renewable capacity addition and storage systems to meet the growing demand for clean energy. A strong advocate of energy storage systems, Sharma remarks, “With growing focus on solar and wind energy, credible energy storage systems are required to firm up power and fill the gaps created by these intermittent generation sources. Renewable energy uptake will not happen at the desired pace without proper storage systems, especially in rural and remote areas.” Going forward, state agencies will focus on grid modernisation to integrate and absorb renewable energy into the system.

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