Maharashtra Energy Development Agency’s Petition For 50% In-State Renewable Purchase Obligation Faces Regulatory Hurdles

In a recent development, the Maharashtra Energy Development Agency (MEDA) has filed a petition under Section 86(1)(e) of the Electricity Act, 2003, seeking directives for Distribution Licensees in Maharashtra to fulfill 50% of their total Renewable Purchase Obligation (RPO) through the purchase of energy from renewable sources within the state. This move is in alignment with the amendment to the Renewable Energy Generation Policy 2020 issued by the Government of Maharashtra on June 30, 2022.

Maharashtra, being a state abundant in renewable energy resources, has witnessed significant growth in installed capacity, reaching 10,799 MW as of September 2022. Despite this, the state has only tapped 7% of its total potential. The recent policy amendment by the Government of Maharashtra sets a target of adding 17,360 MW of renewable energy capacity by 2027.

The amendment introduces incentives for developers, including a 10-year exemption from Electricity Duty for solar, wind, urban industrial waste, and biogas cogeneration projects. Notably, it mandates that 50% of the total RPO of Distribution Licensees within Maharashtra must be met from sources within the state. MEDA, as mandated by the amendment, has filed a petition urging the Commission to issue appropriate directions to Distribution Licensees for compliance with this requirement.

However, the petition faces opposition from various quarters. Distribution Licensees argue that the imposition of such a mandate contradicts the Electricity Act of 2003, as it restricts their ability to procure RE power from specific sources. They emphasize the importance of a competitive bidding process to ensure fair tariffs for consumers.

Furthermore, concerns are raised about transmission constraints for bringing additional renewable energy from outside the state. MEDA contends that the development of renewable capacity within Maharashtra would alleviate the need for significant investments in transmission strengthening.

Opponents of the petition also highlight the importance of promoting competition and argue that intra-state projects should compete with inter-state projects based on merit. They suggest that the proposed mandate could hinder the competitiveness of the bidding process.

The Maharashtra State Electricity Distribution Company Limited (MSEDCL) emphasizes the transparency of the bidding process and adherence to central government guidelines. Indian Railways and other stakeholders argue that the amendment to the Renewable Energy Policy is not binding on the Commission, as it goes against the principles of interstate trade under the Constitution of India.

The Commission, in its response, acknowledges the need for a coordinated effort to meet the Renewable Purchase Obligation targets. However, it expresses reluctance to impose restrictions on Distribution Licensees, emphasizing the importance of a competitive market. The Commission also notes that, with the expiration of the waiver of inter-state transmission charges, intra-state projects would become competitive. In conclusion, the Commission dismissed the petition, stating that imposing restrictions on procuring 50% of RPO requirements from projects within Maharashtra would be anti-competitive and against the principles of promoting competition outlined in the Electricity Act of 2003. The Commission encourages a coordinated effort for the speedy development of renewable energy projects to meet the state’s RPO targets by 2030.

Please view the document below for more details.