MSEDCL Junks Plan To Procure 1 GW Of Thermal Power

Buoyed by the growth of renewable energy in the state and the cost dynamics, the Maharashtra government has junked its plan to procure 1 GW of thermal power to cater to its rising power needs. Earlier, the state-owned discom had planned to issue a 1 GW tender to procure thermal energy for the state for a medium term.

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MSEDCL had also moved to the Maharashtra Electricity Regulatory Commission (MERC)  seeking their approval for the same. The discom has now withdrawn its plan to procure 1,000 megawatts (MW) of thermal power. MERC has also allowed the distribution utility to cancel its proposed bidding process, citing cost inefficiencies and the growing share of renewable energy in the state’s power mix.

In an order issued by the MERC, it allowed the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to withdraw its petition seeking approval for the bidding documents related to medium-term procurement of 1,000 MW of power between April 2025 and March 2030.

The decision follows an internal review by MSEDCL, which concluded that the proposed procurement was no longer necessary.

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A Costly Thermal Fleet

The utility had originally filed the petition on January 21, arguing that nearly 20% of the Maharashtra State Power Generation Company’s (MSPGCL) generation capacity was outdated, inefficient, and in need of replacement. 

MSEDCL said it was paying between Rs 9.00 and Rs 9.50 per kilowatt-hour (kWh) for power from MSPGCL plants, while medium-term power was available through power exchanges and bilateral contracts at a lower cost of Rs 5.50 to Rs 6.50 per kWh.

It also noted that no fixed charges would be applicable for outdated MSPGCL units that were not operational.

Regulatory Pushback

During a virtual hearing on February 11, the Commission questioned the rationale behind adding new thermal capacity at a time when MSEDCL had signed several renewable energy agreements. The three-member bench – Chairperson Sanjay Kumar and Members Anand M. Limaye and Surendra J. Biyani – directed MSEDCL to justify the need for additional thermal procurement and clarify how it would help reduce overall power purchase costs.

Tender Cancelled Before Launch

In a submission dated March 12, MSEDCL informed the Commission that it had decided to cancel the tender altogether, as the documents had not yet been issued to the public and were still under regulatory review.

The cancellation is seen as part of a broader trend among Indian states reassessing thermal additions as renewable energy becomes more cost-competitive and widely available.