MSEDCL Gets Nod to De-Link MSKVY 2.0 From PM-KUSUM

The Maharashtra Electricity Regulatory Commission (MERC) has approved a petition filed by Maharashtra State Electricity Distribution Co. Ltd. seeking permission to initiate competitive bidding for the procurement of 2,269 MW of solar power under the Mukhyamantri Saur Krushi Vahini Yojana 2.0.

The procurement is aimed at helping the state utility meet its Renewable Purchase Obligations (RPO) while ensuring daytime electricity supply to agricultural consumers through solarised feeders.

MSEDCL’s Proposal

In its petition, MSEDCL informed the Commission that it plans to procure 2,269 MW of distributed solar capacity through a competitive bidding process. The utility estimated that the procurement could result in a weighted average tariff of around ₹2.81 per kWh, potentially leading to savings of about ₹4,700 crore by opting not to avail Central Financial Assistance (CFA) under the Pradhan Mantri KUSUM Scheme.

The utility also sought approval for two key deviations from previously approved bidding conditions. These included de-linking the tender from the PM-KUSUM Component C scheme and reducing the ceiling tariff to ₹2.90/kWh, compared with the earlier approved ceiling of ₹3.10/kWh.

MSEDCL further requested an exemption from Domestic Content Requirement (DCR) norms, citing memorandums issued by the Ministry of New and Renewable Energy (MNRE). The exemption would allow developers to use imported solar cells for bids submitted until August 31, 2025, aimed at addressing supply shortages and higher costs associated with domestic modules.

The utility also addressed delays in earlier project phases, attributing them to right-of-way challenges, forest clearances, extreme weather events, and the Model Code of Conduct during elections.

According to MSEDCL, the procurement forms part of its broader resource adequacy plan, which targets 25,258 MW of solar capacity by 2030.

MERC’s Observations

While examining the petition, MERC reviewed the progress of solar procurement under the MSKVY programme. The Commission noted that although 18,835 MW of solar capacity had previously been approved, there was a shortfall of 2,832 MW in contracted capacity due to the closure of earlier programme phases and the expiry of certain contracts.

The Commission also expressed concern over the slow progress of projects under the MSKVY scheme and directed MSEDCL to submit a comprehensive report outlining project hurdles and action taken against defaulting developers.

At the same time, MERC evaluated the proposed deviations in the bidding framework, noting that the measures were aimed at reducing the cost of solar procurement.

Commission’s Decision

In its order, MERC approved the petition, allowing MSEDCL to proceed with the competitive bidding process for 2,269 MW of distributed solar capacity under MSKVY 2.0.

The Commission also permitted the utility to implement the proposed deviations in the Request for Selection (RfS) and Power Purchase Agreement (PPA) documents, including the revised ceiling tariff and the de-linking from the PM-KUSUM Component C framework.

Rationale for Approval

MERC stated that the proposed procurement falls within the cumulative limit of 18,835 MW earlier approved for the solarisation of agricultural feeders in Maharashtra.

The Commission also accepted the utility’s argument that removing CFA linkage and lowering the ceiling tariff could help discover more competitive tariffs through bidding, potentially benefiting consumers.

MERC further clarified that distribution licensees have the liberty to set ceiling tariffs, while the final competitiveness of the discovered tariff will be assessed during the tariff adoption stage.