MERC Approves Tariff for Adani Electricity's 250 MW Wind Power Deal

The Maharashtra Electricity Regulatory Commission (MERC) has approved Adani Electricity Mumbai Ltd.-Distribution (AEML-D)’s proposal to procure 250 MW of wind power from JSW Neo Energy Ltd. at a tariff of INR 3.65/kWh.

The power purchase agreement (PPA) will be valid for 25 years, ensuring long-term stability in renewable energy supply for Mumbai consumers.

This decision aligns with AEML-D’s Renewable Purchase Obligation (RPO) targets and helps meet the increasing electricity demand in the region. AEML-D’s current peak demand stands at 2,056 MW and is projected to rise to 2,196 MW by FY 2029-30. The company anticipates a shortfall ranging between 450 MW and 950 MW, particularly during evening peak hours when solar power generation is unavailable.

Given the volatility of energy exchange prices, which have fluctuated between INR 6.85 and INR 8.09/kWh during peak hours, the approved tariff of INR 3.65/kWh for wind power provides a more cost-effective and stable alternative. The tariff is also competitive with recent auctions conducted by the Solar Energy Corporation of India (SECI), where wind energy prices ranged from INR 3.60 to INR 3.81/kWh. Additionally, this intra-state procurement will avoid transmission charges and losses associated with inter-state power purchases, further enhancing cost efficiency.

AEML-D’s wind power procurement follows MERC’s RPO targets, which mandate wind energy contributions between 0.67 percent and 3.48 percent for projects commissioned after March 2024. The competitive bidding process was conducted on the Bharat-Electronic Portal (ISN-ETS) on July 1, 2024, in accordance with the Ministry of Power’s (MoP) guidelines issued on July 26, 2023. A total of three developers participated, collectively offering 1,100 MW of wind power capacity, with JSW Neo Energy emerging as the lowest bidder.

It may be noted that, previously, AEML-D had submitted a petition to MERC for the long-term procurement of 1,500 MW of renewable energy on a round-the-clock (RTC) basis. However, in its order dated December 26, 2024, MERC granted only partial approval, instructing AEML-D to reassess its power requirements. This was primarily due to its existing Power Purchase Agreement (PPA) with Adani Power Ltd.'s Dahanu Thermal Power Station, which will remain operational until FY 2029-30.

AEML-D has reported a non-solar RPO shortfall of 3,900 million units (MU) as of FY 2023-24, necessitating additional wind power procurement. To address this, the company issued a tender for 600 MW of wind energy on February 27, 2024.

The bidding process received strong participation, with three bidders collectively offering 1,100 MW. After a financial evaluation and an e-reverse auction, JSW Neo Energy Ltd. secured the contract with the lowest bid of INR 3.78/kWh, which was later negotiated down to INR 3.65/kWh.

MERC, after reviewing the transparent bidding process and comparing the rate with recent SECI auctions, found the tariff competitive and approved the procurement under Section 63 of the Electricity Act, 2003. This approval allows AEML-D to integrate the 250 MW of wind power into its long-term resource planning, ensuring a reliable and sustainable power supply for Mumbai while supporting Maharashtra’s renewable energy transition.