MERC Approves MSEDCL’s 700 MW Solar Power Procurement to Strengthen Renewable Energy and Grid Stability

The Maharashtra Electricity Regulatory Commission (MERC) has approved a significant solar power procurement by the Maharashtra State Electricity Distribution Company Ltd. (MSEDCL), aimed at boosting the state’s renewable energy capacity. On January 1, 2026, MERC issued an order approving MSEDCL’s petition to adopt a tariff for the long-term purchase of 700 MW of solar power from M/s. JSW Neo Energy Ltd., through the Solar Energy Corporation of India (SECI). This procurement falls under the ISTS Solar Tranche-XIII scheme and is part of MSEDCL’s strategy to meet its Renewable Purchase Obligation (RPO) targets.

MSEDCL filed the petition on December 19, 2024, highlighting the need to expand its renewable energy portfolio in line with the rising RPO requirements. For the 2025-26 period, the RPO target for the distribution company is 33.01%, which is expected to increase to 43.33% by 2029-30. The petition also referenced MSEDCL’s Resource Adequacy Plan, which factored in the 700 MW solar capacity for the financial year 2026-27, confirming that the procurement aligns with the company’s long-term renewable energy plans.

The Commission approved a landed tariff of ₹2.63 per kWh for the project. This includes a discovered tariff of ₹2.56 per kWh and a trading margin of ₹0.07 per kWh payable to SECI. MERC noted that the approved tariff is competitive, especially when compared to MSEDCL’s average power purchase cost of ₹4.82 per kWh for the financial year 2023-24. The trading margin is allowed as per CERC Trading License Regulations, but it is conditional on SECI providing the necessary payment security arrangements, such as letters of credit.

During the proceedings, MERC also sought clarity on how MSEDCL would manage surplus solar power. The distribution company explained its plan to utilize energy storage solutions, including 2,750 MW (5,500 MWh) of Battery Energy Storage Systems (BESS) and 3,500 MW of Pumped Storage Projects (PSP). These systems are intended to store excess energy during off-peak periods and strengthen grid stability. A 250 MW BESS project is already under construction and is expected to be commissioned by August 21, 2026.

The 700 MW solar project is planned to be located in Maharashtra and connected to the InSTS network. It is expected to be commissioned in the financial year 2026-27. The Power Sale Agreement (PSA) signed on October 8, 2024, will be valid for 25 years from the Scheduled Commencement Supply Date. With MERC’s approval, MSEDCL can now execute the PSA, and the energy generated from this solar project will count toward the company’s RPO targets, supporting Maharashtra’s growing focus on renewable energy and grid stability.