As one of the leading industrialised states of India with thriving metropolitan cites, Maharashtra has always had a high demand for power. The growing concern over emissions from these industries and cities, and the consequent adverse impact on the environment, has resulted in the promotion of renewable energy in the state. To this end, various policy and regulatory developments have taken shape. However, there have been problems and confusion regarding metering regulations and grid support charges, and overall, the state has found it challenging to meet its renewable purchase obligations (RPOs). To an extent, the confusion regarding the regulations comes from this key challenge that the discoms are facing in the state.
Renewable Watch takes a look at the status of the renewable energy sector in Maharashtra, the key policy and regulatory developments, and the major trends in project development and tendering in 2020…
As of November 2020, the state had the highest installed power capacity in the country, at 43,745 MW. At 9,871.64 MW, renewable energy made up about 22.5 per cent of this capacity. Renewable energy deployment has been gradually increasing in Maharashtra, and the state today has the fourth highest installed renewable energy capacity in the country after Karnataka (15,315.7 MW), Tamil Nadu (14,827.07 MW), and Gujarat (11,826.48 MW). At 5,000.33 MW, the installed wind power capacity accounts for around 50 per cent of the total renewable capacity in the state. In second place is bioenergy, with a total installed capacity of 2,596.99 MW. Of this, biomass power (bagasse cogeneration), biomass cogeneration (non-bagasse) and waste-to-energy (WtE) account for 2,568 MW, 16.4 MW and 12.59 MW respectively. Solar power accounts for the third highest installed capacity among renewables, at 1,894.74 MW, comprising ground-mounted projects (1,632.24 MW) and rooftop projects (262.50 MW). The remaining 379.58 MW is small-hydro capacity.
The state has also been promoting the use of decentralised and off-grid renewable energy applications in a bid to reach communities that are not able to secure regular supply of grid electricity. At 35.16 MW, Maharashtra has the second highest installed capacity of off-grid WtE plants. The state has also installed a total of 253,214 solar lighting systems, comprising 10,420 street lighting systems, 3,497 home lighting systems and 239,297 solar lanterns. Further, the state has installed 3,857 kWp of small-scale solar power plants and 11,315 solar photovoltaic (PV) pumps.
Policy and regulatory developments
In January 2021, the state issued the Unconventional Energy Generation Policy, 2020. Under the policy, the state has set a target of developing 17,360 MW of renewable energy projects by 2025. Of the target capacity, 12,930 MW will be contributed by solar power projects, 2,500 MW by wind power projects, 1,350 MW by cogeneration projects, 380 MW by small-hydro projects, 200 MW by solid waste energy projects. Additionally, the policy plans to set up various off-grid applications including solar pumps, microgrids, solar cooking systems and solar cold storages.
In December 2020, the Maharashtra Electricity Regulatory Commission (MERC) issued an order, allowing Maharashtra State Electricity Distribution Company Limited (MSEDCL) to float open tenders through a continuous bidding process for solar projects under the Mukhyamantri Saur Krishi Vahini Yojana (MSKVY). The order was passed after MSEDCL reported poor response for 6.5 GW of its solar tenders issued in the past three years. It had received bids for 1,873 MW and was able to allocate only 527 MW, thus finding it hard to meet its RPO. The discom’s petition also attributed the poor response to the high tariff ceiling of Rs 3.30 per kWh, and the low availability of cheap land.
However, the MERC pointed out that there could be operational challenges if MSEDCL adopts the continuous bidding method. The commission further noted that setting a tariff ceiling could be counterproductive as the bidders may bid only at that tariff. The commission suggested that MSEDCL float expressions of interest or offer land upfront to improve bidder response. In response, MSEDCL proposed to float tenders of different capacities for various locations based on their agricultural load instead. Further, MSEDCL reported that it was working on an online portal to register and provide land parcels with tender documents. For these tenders, a ceiling tariff of Rs 3.11 per kWh was proposed by the discom. MSEDCL also petitioned for the capacity utilisation factor for decentralised solar projects to be revised from 15 per cent to 19 per cent, as prescribed by the Ministry of New and Renewable Energy (MNRE).
Earlier, in October 2020, the MERC had ruled in favour of the Captive Power Producers Association seeking relief under the RPO regulations for projects commissioned before April 1, 2016.
Another big announcement was the commission’s decision to not levy any grid support charges on rooftop solar installations until the cumulative rooftop PV capacity of the state reaches 2 GW. The decision was taken in a bid to reduce additional tariff burdens on non-solar consumers, despite the regulatory mandate to impose grid support charges. This decision was a relief for many stakeholders (mainly rooftop solar developers), who had opposed the original decision to levy grid support charges when it had been proposed in January 2020. At that time, MSEDCL had proposed substantial charges for net metering rooftop solar systems with a capacity of over 10 kW.
Apart from these decisions, the commission approved a banking charge in the form of energy adjustment of 7.5 per cent and 12 per cent for any excess generated energy fed back into the grid for high tension and low tension consumers respectively. Also, behind-the-meter rooftop solar plants were exempted from additional fixed charges.
In April 2020, the MERC announced various charges payable by open access consumers for financial years 2020-21 to 2024-25. This development was important, as it yet again came in response to a distress call from the discoms regarding open access. MSEDCL claimed that since many consumers were buying power under open access instead of availing of supply from it, the generation capacity it had tied up remained idle. MSEDCL thus stated that for cross-subsidy surcharge to be applicable, it would need to be based on the current level.
In the rooftop solar space, another key development took place in January 2020, with the MERC finally issuing new metering regulations. These applied to both net metering and gross metering. According to the regulations, the net metering and gross metering arrangements were to be permitted by a discom on a non-discriminatory, first come, first served basis to eligible consumers that had already installed or were likely to install a renewable energy generating system connected to the discom’s network.
Key commissioned and auctioned projects
In December 2020, EESL announced the commissioning of its 7.9 MW solar project for MSEDCL, within six months of the contract being awarded. The project is located in Devdaithan village in Ahmednagar, Maharashtra. The total investment in the project was Rs 337 million. The project has been set up to solarise agricultural feeders under the MSKVY. Earlier, EESL had developed two solar projects in Ahmednagar district – a 507 kW project at Ashwi and an 858 kW project at Kopleswadi – which have since benefited over 3,000 agricultural consumers. The projects have also reduced 11,500 tonnes of carbon dioxide emissions.
Meanwhile, among private players, French company Technique Solaire commissioned 20 MW of solar projects across Maharashtra in January 2020. Central Electronics Limited (CEL) announced the auction results for its 44 MW solar tender for projects to be set up on open, unused lands on the premises of existing MSEDCL substations, in February 2020. The winners were Gensol Engineering Private Limited (13.2 MW), Kor Energy India Private Limited (11 MW), Purshotam Profiles Private Limited (8.8 MW), Mitcon Consultancy and Engineering Services Limited (6.6 MW) and Kalpa Power Private Limited (4.4 MW). Gensol had quoted the lowest price of Rs 15.10 per W. After the bidding, CEL asked all the other bidders to go with a tariff of Rs 15.05 per W.
Key rooftop and small-scale solar tenders
In September 2020, MSEDCL invited bids for the empanelment of agencies to install 25 MW of grid-connected rooftop solar systems. In the same month, the Maharashtra Energy Development Agency (MEDA) issued an expression of interest to empanel suppliers for over 5,000 LED-based solar lanterns and study lamps per year in the state. In June 2020, MEDA issued a tender for the development of around 3.98 MW of solar projects (1.4 MW at Akola, 1 MW at Vasai-Virar and 1.58 MW at Amravati) under the Atal Mission for Rejuvenation and Urban Transformation in Maharashtra. In February 2020, Bharat Sanchar Nigam Limited (BSNL) invited bids for 2.5 MW of grid-connected rooftop solar PV projects to be set up on BSNL’s buildings across Maharashtra under the RESCO model.
Non-solar tender activity
In February 2020, MSEDCL issued a tender for the procurement of 100 MW of power from bagasse-based cogeneration projects. The tender had a ceiling tariff of Rs 3.56 per kWh, with 50 per cent of the tariff to be treated as variable cost. Earlier, in January 2020, MSEDCL had issued a tender for procuring 200 MW of wind power on a long-term basis from intra-state wind power projects. This tender had a ceiling tariff of Rs 2.52 per kWh.
MSEDCL’s tender for the long-term procurement of power from 500 MW of intra-state grid-connected solar power projects (Phase V) was undersubscribed by 150 MW. Avaada Energy and Tata Power bid for 250 MW and 100 MW respectively. MSEDCL had set a ceiling tariff of Rs 2.90 per kWh for the tender.
A previous district-wise 1,350 MW solar tender floated by MSEDCL (conducted under the state’s MSKVY) faced a similar fate. In spite of repeated extensions of the bid submission deadline, the response was very poor. Against the total bid capacity of 1,350 MW, only one bid was received for 5 MW, and that too from only one bidder. The bid received was for Baramati district and the bidder, Kiran Renewables, was found to be technically qualified. The tariff ceiling for this tender was set at Rs 3.14 per kWh. Considering the poor response, in January 2020, MSEDCL reissued the tender and raised the ceiling tariff to Rs 3.30 per kWh.
Outlook for the future
Overall, limited development of projects is not the only parameter that has been impinging on the success of the renewable energy sector in the state. Regulatory uncertainty has also had an impact and will continue to do so, as it hampers investor confidence.
However, certain developments are taking place in the state, especially in the solar space that will help the state improve its future outlook. These include the planned 600 MW ultra mega renewable energy project, which will be partly developed through a consortium with NTPC Limited. The state is also developing four floating solar power projects with a cumulative capacity of 500 MW at four of its dams – the backwaters of Wardha, Bebala, Khadakpurna and Pentakli. The successful implementation of its new renewable energy policy too will go a long way to improve the renewables quotient of the state.
By Sarthak Takyar