The Maharashtra State Electricity Distribution Company Limited (MSEDCL) recently announced the results of the bid for its 500 MW PM KuSUM scheme, aimed at promoting solar power projects for feeder level electrification. The selected bidders will set up solar power projects in accordance with the provisions of the Request for Selection (RfS) document and the Draft Power Purchase Agreement (PPA) provided by MSEDCL.
As per the results of the bid, the tariff discovered is Rs. 3.10/kWh, and there is also a subsidy of 30% of the project cost. The selected bidders will enter into a Power Purchase Agreement (PPA) with MSEDCL for the purchase of solar power for a period of 25 years from the commercial operation date of the solar power projects based on the terms, conditions, and provisions of the RfS.
The bidding process was conducted through e-bidding and e-reverse auction, and the tariff payable to the selected bidder will be fixed for 25 years based on the discovery made during the auction. The bidders will be free to avail fiscal incentives like Accelerated Depreciation, Tax Holidays, benefits from trading of carbon credits, etc. as available for such projects, if applicable. However, the same will not have any bearing on comparison of bids for selection.
The PM KuSUM scheme is aimed at promoting the installation of small solar power projects with a capacity of up to 2 MW on barren or fallow lands. The scheme also includes the provision of solar pumps for irrigation and grid-connected solar power plants for rural areas.
The erstwhile Maharashtra State Electricity Board was responsible for generation, transmission, and distribution of electricity in the state. However, in 2005, the Electricity Act was amended, leading to the unbundling of the state electricity board into separate companies responsible for generation, transmission, and distribution.
While the PM KuSUM scheme is a step in the right direction towards promoting renewable energy, there have been concerns raised about the implementation of the scheme. In our previous reportw we highlighted the challenges faced by the scheme, including delays in implementation, inadequate budgetary allocation, and lack of awareness among farmers.
| Scheme | 500 MW PM KuSUM Scheme |
|---|---|
| Aim | Promote solar power projects for feeder level electrification |
| Selected bidders | Will set up solar power projects based on the Request for Selection (RfS) document and Draft Power Purchase Agreement (PPA) provided by MSEDCL |
| Tariff discovered | Rs. 3.10/kWh |
| Subsidy | 30% of project cost |
| Power Purchase Agreement | Selected bidders will enter into a 25-year PPA with MSEDCL based on the RfS |
| Bidding process | Conducted through e-bidding and e-reverse auction |
| Fiscal incentives | Bidders can avail of Accelerated Depreciation, Tax Holidays, and benefits from trading of carbon credits |
| PM KuSUM scheme | Promotes installation of small solar power projects up to 2 MW on barren or fallow lands, provision of solar pumps for irrigation, and grid-connected solar power plants for rural areas |
The MSEDCL’s bid for the PM KuSUM scheme is a positive development in promoting solar power projects for feeder level electrification. The selection of bidders through e-bidding and e-reverse auction ensures transparency and fair competition, while the provision of fiscal incentives encourages private investment in the sector. However, the scheme must be implemented effectively to achieve its objectives and overcome the challenges faced.Regenerate response