Adani wins tender to supply 6,600 MW of electricity at Rs 4.08 per unit

The combination ensures that thermal power meets baseload needs while cheaper solar power is available on the grid, the sources said, adding that combining renewable and thermal power is aimed at increasing scale efficiencies. Photo: Bloomberg

4 minutes of reading Last update: Sep 15, 2024 | 11:41 AM IST

The Adani Group has won the tender to supply 6,600 MW of combined renewable and thermal power to Maharashtra on a long-term basis at a price of Rs 4.08 per unit, beating bids from JSW Energy and Torrent Power, sources said.

The government’s offer for a combined supply of renewable and thermal energy for 25 years was almost a rupee lower than the current cost of electricity in Maharashtra and will help meet the state’s future electricity needs, two sources with direct knowledge of the matter said.

Deliveries are scheduled to begin within 48 months from the date of signing the letter of intent.

As per the tender terms, Adani Power will supply solar power at a fixed price of Rs 2.70 per unit throughout the supply period, while the price of coal-based power will be indexed to coal prices.

Maharashtra State Electricity Distribution Company (MSEDCL) had in March announced a unique tender for supply of 5,000 MW of solar electricity and 1,600 MW of coal-based electricity.

The tender was announced just before the Model Code of Conduct for Lok Sabha elections came into force and was awarded to Adani before the announcement of state assembly elections.

The tender involved combining solar energy with thermal energy to meet peak energy demands and during hours when there is no sun (e.g. at night or during monsoon/winter months).

It gave equal energy weight to electricity generated from renewable energy sources and coal-fired power. Bidders were asked to provide a unified tariff for the supply of 6,600 MW of electricity (5,000 MW from solar and 1,600 MW from thermal).

According to sources, Adani Power had offered a price of Rs 4.08 per unit to win the contract.

Its offer is comparable to the price of Rs 4.36 per unit offered by the second cheapest bidder, JSW Energy, and the average purchasing cost in Maharashtra last year of Rs 4.70 per unit.

The rate is about Rs 1 per unit lower than the Maharashtra Electricity Regulatory Commission (MERC)-approved average electricity purchase price of Rs 4.97 per kWh (unit) for 2024-25.

A total of four companies participated in the tender for the supply of electricity for a period of 25 years.

The weighted average tariff for thermal and solar projects will help achieve lower effective power tariff. Separate PPAs will be entered into for solar and thermal projects. However, the combined power purchases will be followed in spirit even after that, sources said.

The procurement package is aimed at meeting the future electricity demand of the state, the source said, adding that against MSEDCL’s contracted generating capacity of 27,877 MW, the peak demand is projected at 35,573 MW in 2028-29 and 39,884 MW in 2032-32.

According to sources, MSEDCL has designed the tender in such a way that it gives equal weightage to the solar and thermal components. 5,000 MW of solar energy equals 1,600 MW of thermal energy in terms of capacity utilisation factor (CUF). The ratio of thermal to renewable energy is 1:3.

The combination ensures that thermal energy meets baseload demand while the grid has access to cheaper solar power, the sources said. They added that combining renewable and thermal energy is expected to increase scale efficiencies.

Sources said Adani would receive a fixed price for renewable energy for 25 years, while the price of coal-based electricity would rise but roughly balance out after taking into account amortisation of 1.5-2 per cent.

As per the regulatory requirements under the Renewable Energy Purchase Obligation (RPO), 32 per cent of energy demand in Maharashtra is to be met from solar sources by 2028.

Currently, that figure is just 12 percent, so purchasing 5,000 MW of solar power will help meet that demand.

Adani Power, India’s largest private thermal power producer, has a generating capacity of over 17 GW, which is expected to increase to 31 GW by 2030.

Its sister company, Adani Green Energy Ltd, is the country’s largest renewable energy company with a generating capacity of 11 GW, which is expected to increase to 50 GW by 2030.

(Only the headline and image of the report may have been edited by the Business Standard team; the rest of the content is automatically generated from a syndicated feed.)

First published: Sep 15, 2024 | 11:40 AM IST