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The Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) filed a petition requesting the approval of a competitive bidding process for energy storage solutions. Specifically, they sought to secure 3,000 MW of energy storage capacity, including an option for an additional 2,000 MW. The storage is intended to come from pumped hydro storage plants, offering up to eight hours of energy discharge over a 40-year period.
The urgency of the case stems from MSEDCL’s need to secure energy storage to integrate large-scale renewable energy into their grid. The company emphasized that their long-term contracts with various power producers would not be enough to meet peak demands in the coming years. As per projections, MSEDCL will experience significant growth in peak demand, rising from about 25,000 MW in 2024-25 to around 42,000 MW by 2033-34.
MSEDCL has already implemented various measures to meet future demand, including the procurement of energy storage through this competitive bidding process. They initiated the tender in March 2024 and received bids from several major energy companies, including JSW Neo Energy Limited and Torrent Power Limited. MSEDCL’s goal was to ensure they could meet their peak-hour demands while also fulfilling obligations related to renewable energy integration.
During the bidding process, MSEDCL followed a structured and transparent evaluation method. They assessed bids based on factors such as annual fixed charges and energy storage efficiency, referred to as cycle loss. The top two bidders, JSW Neo Energy Limited and Torrent Power Limited, offered tariffs below the ceiling price set by MSEDCL. Both companies bid for 500 MW of storage each, with a total of 1500 MW including the additional capacity offered through the green shoe option.
The need for energy storage is particularly urgent for MSEDCL as they integrate more renewable energy sources, like solar and wind power, into the grid. These energy sources are not consistently available throughout the day, and storage solutions are necessary to ensure that surplus energy generated during non-peak hours can be stored and used during peak demand times. Without adequate storage, MSEDCL risks relying on short-term contracts or power exchanges during peak periods, which can be more expensive.
The energy storage procurement through pumped hydro storage plants is seen as a cost-effective solution. By securing long-term storage capacity, MSEDCL aims to replace more expensive short-term energy purchases and better manage the fluctuations in renewable energy production. The competitive bidding process resulted in favorable tariffs for MSEDCL, with effective costs projected to be around ?6.77 to ?6.80 per unit of energy, lower than other storage and short-term power options.
The Commission, after reviewing the details of the competitive bidding process, found that MSEDCL had adhered to a fair and transparent procedure. It determined that the tariffs discovered were reasonable in the current market context. Consequently, the Commission approved MSEDCL’s request to adopt the tariff for the energy storage capacity from the successful bidders, ensuring a stable and reliable power supply for the future. |
