MSEDCL Gets Approval to Procure Wind Power From Projects with Expired EPAs

MSEDCL had filed its case on February 26, 2019, seeking approval for procurement of power from wind projects whose Energy Purchase Agreements (EPAs) with MSEDCL have expired. In its petition, the discom requested the commission to admit the petition as per the provisions of the Commissions’ Regulations for Renewable Purchase Obligation (RPO) compliance and implementation.

And, to allow it to procure the wind power from the wind generators of Group II, III and IV whose EPAs with MSEDCL have expired, at the Tariff of Rs 2.52 per unit for balance useful life. And to allow MSEDCL to claim such procurement for the fulfillment of RPO of MSEDCL.

MSEDCL had submitted this request as it could not attract the interest of bidders when it had floated a tender for procuring power from such wind projects keeping a ceiling tariff at Rs 1.97 per kWh, which was set by the state commission.

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While going through the submissions made by MSEDCL, the commission believed that wind power generators with expired EPA’s are free to sell the energy they produce to any buyer. And that they can do the same even with MSEDCL, under short-term route which would work at a higher rate of Rs 2.25-2.52 per kWh.

As per the final order, MSEDCL has been permitted to set the ceiling tariff rate for procurement of power but has been ordered to do so with proper due diligence on their end. Following which they can float the tender for procuring energy for a period more than one year from wind generators whose EPAs have expired. Competitiveness of the rate discovered will be dealt with by the commission during the tariff adoption process for meeting the non-solar RPO requirement.

The ceiling tariff set by MSEDCL for such an auction should not be less than the tariff set by MERC for short-term procurement; Rs 2.25-2.52 per kWh. The ceiling tariff for Group I wind projects without EPA cannot be more than Rs2.25 and ceiling tariff for Group II, III and IV wind projects without EPA should not be more than Rs 2.52 per kWh.

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In another recent order, MERC approved Adani Electricity Mumbai Limited’s (AEML) petition to initiate the bidding process for the procurement of 700 MW of solar power. The commission ordered to initiate bidding without the domestic content requirement condition under single-stage bidding process as stipulated under standard bidding guidelines.

While on expired EPA’s, it would be interesting to see when a policy will evolve on upgrading such expired or simply obsolete wind generators. Upgrading generation on existing sites could offer a massive opportunity, provided policy hurdles are cleared.