Petition of MSEDCL for long term procurement of 2500 MW RTC Power with the MoP’s RE RTC guidelines – EQ

Summary:

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## 1. Background & Rationale for Procurement

### 1.1 Existing Solar PPA
– MSEDCL executed a **PPA with Adani Renewable Energy Fifty-Five Ltd** on **29 October 2024** for **5000 MW solar power** at **₹2.70/kWh** (approved by MERC on 26 September 2024).
– The solar power is being developed at **Khavda RE Park, Gujarat**.
– Scheduled commissioning of solar phases:
– Phase I (1000 MW): 29 April 2026
– Phase II (1000 MW): 29 October 2026
– Phase III (2000 MW): 29 April 2027
– Phase IV (1000 MW): 29 July 2027

### 1.2 Need for RTC Power
– **Resource Adequacy Plan** approved by MERC (28 March 2025) projects:
– Peak demand growth from **25,412 MW (FY26) to 32,994 MW (FY30)**
– CAGR of **5.07%**
– **Daytime solar surplus** needs optimization (as directed by MERC in MYT Review Order dated 25 June 2025)
– **Data centre growth** in Maharashtra requires verifiable, traceable green power for sustainability reporting
– **State RE Policy (2025–36)** targets **65% renewable energy share by 2035–36**

### 1.3 Key Benefits Cited by MSEDCL
| Benefit | Description |
| :— | :— |
| **RTC demand profile** | Reduces reliance on short-term power, improves grid stability |
| **Data centre & AI readiness** | Provides traceable green power for carbon footprint reduction |
| **GNA optimization** | 5 GW solar capacity uses only 2.5 GW of GNA → reduces congestion & cost |
| **Lower ATC augmentation** | Reduced transmission infrastructure investment |
| **RPO compliance** | Helps meet Renewable Purchase Obligations |
| **Cost efficiency** | Optimizes solar (day) + thermal/storage (night) mix |

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## 2. Proposed Bidding Structure & Key Deviations (Approved by MERC)

MSEDCL sought **11 major deviations** from the MoP’s RE RTC Guidelines (dated 22 July 2020, amended 3 November 2020). MERC approved all deviations as summarized below.

| **Sl. No.** | **Parameter** | **Guideline Requirement** | **MSEDCL Proposal (Deviation)** | **MERC Decision** |
| :— | :— | :— | :— | :— |
| 1 | **Availability / Supply Obligation** | 90% availability (annual, monthly, peak) | 80% annual, 70% monthly, 90% peak hours (supply-based, not availability-based) | ✅ Allowed – increases bidder participation; SECI example cited |
| 2 | **Tariff Structure** | Two-part tariff (fixed + variable) | **Single-part fixed tariff** for entire 25 years (no escalation) | ✅ Allowed – transfers escalation risk to bidder; benefits MSEDCL |
| 3 | **Minimum Bid Size** | 250 MW | **1250 MW or 2500 MW** (only two options) | ✅ Allowed – necessary to absorb 5000 MW solar input |
| 4 | **Proof of Spare Capacity Tie-up** | Required at bid submission | **Deleted** – supply-based construct | ✅ Allowed – risk on bidder to arrange supply; penalty provisions apply |
| 5 | **Financial Criteria (Net Worth)** | 30% of estimated RE project cost | ₹50 lakh per MW (of bid capacity) | ✅ Allowed – lower threshold increases participation |
| 6 | **Financial Criteria (Turnover)** | Not explicitly specified | ₹1 crore per MW (of bid capacity) | ✅ Allowed |
| 7 | **Financial Criteria (EBITDA)** | Not explicitly specified | ₹50 lakh per MW (of bid capacity) | ✅ Allowed |
| 8 | **Bidding Parameter** | Weighted average levelised tariff + bucket filling | **Single composite tariff for Year 1**, fixed for 25 years; bucket filling without L1+X% range | ✅ Allowed – risk of escalation on bidder |
| 9 | **Grid Unavailability Compensation** | 175 hours allowed for generation compensation | **Any shortfall due to grid unavailability** deemed as supply under PPA | ✅ Allowed – risk beyond ex-bus point on MSEDCL |
| 10 | **BESS Co-location** | Not specified | BESS must be co-located at same site as solar plant (if used) | ✅ Noted & allowed |
| 11 | **Traceable Green Power (TGP)** | Not explicitly defined | **Minimum 51% TGP** annually (hourly computation) | ✅ Accepted – essential for data centres |

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## 3. Detailed Analysis of Key Deviations

### 3.1 Availability Requirement (80% Annual)
– **Justification:** SECI’s similar tender with 90% availability received no response; after reducing to 80%, SECI received 12,151 MW bids against 2,500 MW requirement.
– **MERC View:** Maintains 90% during peak hours; ensures RTC availability; increases competition.

### 3.2 Single-Part Fixed Tariff (25 Years)
– **Justification:** Matches the underlying 5000 MW solar PPA (which also has single-part fixed tariff).
– **MERC View:** Tariff certainty benefits MSEDCL & consumers; escalations risk transferred to bidder.

### 3.3 Minimum Bid Size (1250 MW or 2500 MW)
– **Justification:** Splitting 5000 MW solar input into 250 MW RTC bids is impractical.
– **MERC View:** Unusual but accepted due to unique structure of bundling 5 GW solar into 2.5 GW RTC.

### 3.4 No Proof of Spare Capacity at Bid Submission
– **Justification:** Supply-based tender, not availability-based; bidder can source from multiple plants.
– **MERC View:** Penalty provisions for supply failure protect MSEDCL; risk on bidder.

### 3.5 Lower Financial Thresholds
– **Justification:** Supply-based tender requires lower upfront capex than building new capacity.
– **MERC View:** Encourages wider participation while maintaining adequate financial criteria.

### 3.6 Grid Unavailability Risk on MSEDCL
– **Justification:** Delivery is at ex-bus; transmission beyond that is MSEDCL’s responsibility.
– **MERC View:** Increases bidder confidence & participation.

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## 4. Business Implications for Stakeholders

### For MSEDCL
– ✅ Converts 5 GW variable solar into 2.5 GW firm RTC power.
– ✅ No tariff escalation risk for 25 years.
– ✅ Meets RPO and data centre green power demand.
– ✅ Optimizes GNA utilization (5 GW solar → 2.5 GW GNA).

### For Bidders / Developers
– **Opportunity:** Supply 1250 MW or 2500 MW RTC power with 25-year fixed tariff.
– **Challenge:** Must manage 5000 MW solar input (already tied up with Adani) and arrange balancing power (thermal/storage).
– **Risk:** Supply failure penalties; tariff escalation risk on bidder.
– **Benefit:** No need to prove spare capacity at bid stage; lower upfront financial thresholds.

### For Data Centres & Green Power Consumers
– ✅ Access to **traceable green power** (51% minimum) with hourly accounting – essential for sustainability reporting (e.g., RE100, Science Based Targets).

### For Transmission Planning
– Lower GNA requirement (2.5 GW vs 5 GW) reduces congestion and ATC augmentation costs.

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