Mumbai: When Maharashtra decided to change how it prices power, the idea was simple: Prepare for an expected burst in solar power in the coming years with a model for its efficient use. However, its solution has worried the industry, which fears disruption in the way it does business and raises the cost of power in the country’s fifth-largest solar power state.
State-run power distributor Maharashtra State Electricity Distribution Corp. Ltd (MSEDCL) has proposed pricing power generated from 9 am to 5 pm at the lowest. The industry says this move will end power banking, in which excess power is absorbed by the distribution company and resupplied later when it’s needed. This will force power producers to rework contracts and raise power procurement costs.
Currently, the time-of-day (TOD) structure is such that power banked by solar producers during the peak generation hours of 9am-5pm can be accessed at any time except during the 6pm-10pm window when pricing is at its peak. Under the new system, banked power would only be allowed to be drawn back during the 9am-5pm window — when solar power is abundant anyway — making banking redundant.
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MSEDCL has made the proposal in its FY26-FY30 tariff plan submitted to the Maharashtra Electricity Regulatory Commission (MERC). The commission has yet to decide on the matter.
“MSEDCL’s proposed changes to the TOD mechanism appears to be aimed at fundamentally disrupting the existing regulatory framework in Maharashtra and nullifies the right of solar generating companies to bank energy with MSEDCL,” the National Solar Energy Federation of India (NSEFI), a lobby of renewable energy producers wrote to MERC. The lobby group said that not just its solar power producers, but data centre operators consuming renewable power have also opposed to it, urging MERC to retain the existing TOD structure. Mint has seen a copy of the letter.
NSEFI’s chief executive did not respond to Mint’s request for a comment. The industry body’s members include renewable power producers like Greenko Group, ReNew Power, Suzlon, ACME, Adani Renewables and Sunsure Energy, as well as data centre operators like Sify, Enfinity and Amazon Web Services.
“If banking goes away, we will have to renegotiate power purchase agreements with our customers, and our business fundamentals will go for a toss,” said a top executive at a solar power company, requesting not to be named. “Solar power generation is not uniform through the day, and hence banking is a fundamental requirement, and the industry cannot operate without it,” this executive said.
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Absence of banking will affect producers supplying to commercial and industrial customers as well as demand for rooftop solar installations by industrial and commercial customers, as those installing rooftop solar units will also not be able to benefit from net metering, which is like banking.
“We will have to see how the proposal will affect banking. Banking cannot go away, or else our cost of energy will shoot up sharply and Mumbai will lose its edge as an upcoming data centre hub,” a top executive at a leading data centre firm said on the condition of anonymity.
However, it will not affect solar companies supplying to MSEDCL; hence there is a difference of opinion among power companies too. Companies which do not exclusively produce solar power are more sympathetic to MSEDCL’s proposal.
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“It is a simple equation of supply and demand. If you have excess solar power generation during an eight-hour window, it makes sense to incentivize industries to use more power then. The different tariffs as per the time-of-day structure will incentivize this shift,” said Praveer Sinha, managing director of Tata Power.
The rationale behind MSEDCL’s proposal to revise the TOD structure stems from the sharp surge in solar power generation expected over the coming years, as per its tariff petition. The distribution company expects addition of 20 GW of solar capacity in the state in the coming few years. Presently, solar comprises just under 10 GW out of Maharashtra’s total power generation capacity of 49.5 GW , as per data from Niti Aayog.
As power generation during solar hours goes up, the state is looking to incentivize a shift in consumption during this window to reduce its overall power procurement cost. MSEDCL procures power from a mix of sources, predominant of which is thermal.
Source:https://www.livemint.com/politics/policy/maharashtras-new-power-tariff-proposal-solar-power-renewable-power-msedcl-11742558595010.html