Mahagenco approaches State Govt for cancellation of proposed Solar Parks
   Date :08-Nov-2019
Staff Reporter :
Maharashtra State Power Generation Company Limited (Mahagenco) has approached State Government for ‘cancellation’ of Solar Parks proposed at Washim, Yavatmal, Latur, and Kacharala. For, it faced ‘difficulties’ in development of the allotted Solar Parks. Mahagenco mentioned this in its petition before Maharashtra Electricity Regulatory Commission (MERC). In its petition, Mahagenco sought approval of MERC for deviation from guidelines for tariff-based competitive bidding to undertake development of 552 MW solar projects through engineering-procurement-construction (EPC) contracting route based on competitive bidding. State Government, in December 2016, directed Mahagenco to develop solar projects of 500 MW capacity via EPC route, out of total capacity of 2,500 MW assigned to the power generation utility.
Accordingly, Mahagenco decided to develop solar projects through Solar Parks, for which it received in-principle nod. The proposal was to develop Solar Parks at Washim (170 MW), Yavatmal (75 MW), Latur (60 MW), and Kacharala (145 MW). Thus, it had proposed to develop Solar Parks of 450 MW capacity. As per Mahagenco’s own submission before MERC, it had approached Maharashtra State Electricity Distribution Company Limited (MSEDCL) and other distribution licensees in Maharashtra as well as other States for entering into power purchase agreements (PPAs) from these proposed Solar Parks. However, MSEDCL had provided consent only for 20 per cent power off-take from these projects. Mahagenco did not receive acceptance from other distribution companies.
This delayed further development of Solar Parks. The development got delayed due to other problems like ‘absence of transmission infrastructure, resettlement and rehabilitation issues, remote locations and lack of transport facilities, difficulties in supplying adequate water for project activities, delay in granting of various permissions, and clearances from various Government departments etc’. As is known, delay contributes to increase in capital cost of any project. After facing ‘similar difficulties’ in development of allotted Solar Parks, Mahagenco now intends to build solar projects through EPC contract basis ‘instead of Solar Parks’. It has approached State Government for cancellation of Solar Park at the allotted land. Mahagenco intends to develop 52 MW solar plant at its existing thermal power plants. Accordingly, it has proposed development of total 552 MW solar project ‘through EPC route’.
As there was absence of any guideline for development of solar projects through EPC route, Mahagenco sought approval of MERC for selection of contractor under EPC-based competitive bidding instead of selection of developer under tariff-based competitive bidding process. In response, MERC observed that Mahagenco had proposed altogether different mechanism wherein using EPC-based bidding process capital cost for the project would be deegtrmined and then the tariff could be worked out based on the norms and principles stipulated in the Regulations.
Further, the Commission noted that as generation of electricity had been delicensed under the Electricity Act, Mahagenco or any other generator did nto require any in-principle approval from MERC for setting up of generating plant. The Commission advised Mahagenco to participate in the competitive bidding process being conducted by distribution licensees instead of requesting MERC to allow EPC-based bidding for determination of capital cost and thereafter seek application of cost-plus principles for determination of tariff. With these observations, MERC coram of Anand B Kulkarni, Chairperson; I M Bohari, Member; Mukesh Khullar, Member, dismissed Mahagenco’s petition on November 5 (Tuesday).