MPERC Allows Immediate GST Reduction Benefit In Morena Solar Park Bidding In Maharashtra

The Madhya Pradesh Electricity Regulatory Commission (MPERC) has recently issued an important order that will impact the ongoing bidding process for a major solar project in the state. The decision allows bidders to immediately account for a reduction in the Goods and Services Tax (GST) rate while submitting their final tariff proposals. This move follows a joint petition filed by Rewa Ultra Mega Solar Ltd. (RUMSL), the agency conducting the bid, and MP Power Management Co. Ltd. (MPPMCL), the power procurer for the projects.

The projects in question involve the development of two large, grid-connected solar photovoltaic (PV) projects, co-located with battery energy storage systems, within the Morena solar park in Madhya Pradesh. These projects are designed to ensure 440 MWh of peak power supply during both morning and evening hours, thereby enhancing grid stability and supporting the state’s renewable energy targets. The bidding process for these projects began in September 2024, and both technical and financial proposals were evaluated in early September 2025.

A challenge emerged shortly before the scheduled e-reverse auction. The GST Council, in its 56th meeting on September 3, 2025, recommended a reduction in the GST rate on renewable energy devices and components, including photovoltaic cells, from 12% to 5%. This rate cut was scheduled to take effect from September 22, 2025. Under the usual terms of the Power Purchase Agreement (PPA), such a change would normally be considered a “Change in Law” event. This would allow the power procurer, MPPMCL, to claim tariff adjustments after the PPA execution, meaning the benefit of the tax reduction would not be immediately reflected in the tariff quotes.

Seeing an opportunity to simplify the process and pass benefits directly to consumers, RUMSL and MPPMCL jointly requested the Commission to allow the GST rate reduction to be treated differently. They proposed that the reduction should not be considered a Change in Law event specifically for the Morena Solar Park projects. This approach would enable all eligible bidders to factor in the new, lower GST rate when submitting their final tariff bids during the e-reverse auction, rather than waiting to claim relief later.

All bidders participating in the auction confirmed that they would adjust their tariff quotes to reflect the reduced GST rate. MPERC considered the petitioners’ request and reviewed all submissions and proposals during the hearing on September 23, 2025. The Commission noted the arguments and effectively approved the proposed approach. This decision ensures that the bidding process can conclude with the final tariff reflecting the most competitive rates while already incorporating the benefits of the reduced GST.

This order is seen as a significant step to streamline the tariff discovery process in renewable energy projects and directly pass regulatory benefits to consumers. By allowing the GST rate reduction to be reflected immediately in tariff bids, the state aims to make solar power more cost-effective and accelerate renewable energy deployment. The Morena Solar Park projects, with their integration of battery storage systems, are expected to serve as a benchmark for future solar initiatives in Madhya Pradesh, demonstrating how policy and regulatory flexibility can enhance efficiency and affordability in the energy sector.