Adani wins bid to supply 6,600 MW of electricity at Rs 4.08/unit tariff

Adani group has won a bid to supply 6,600 MW of bundled renewable and thermal power to Maharashtra for the long term after its quote of Rs 4.08 per unit beat the likes of JSW Energy and Torrent Power.

Adani Power's bid for the bundled renewable and thermal energy supply for 25 years was almost a rupee lower than the cost at which Maharashtra currently procures electricity and will help meet future electricity requirements of the state, two sources with direct knowledge of the matter said.

Supplies are to start in 48 months from the date of award of the letter of intent.

Later, the Adani group, in a statement, confirmed the PTI news break.

"Maharashtra State Electricity Distribution Company (MSEDCL) issues a letter of intent for 6,600 MW to Adani Power."

While Adani Power will supply 1,496 MW (net) thermal power from the new 1,600 MW ultra-supercritical capacity, its sister concern Adani Green Energy Ltd will supply 5 GW (5,000 MW) solar power from the Khavda renewable energy park in the Kutch district of Gujarat.

As per the bid conditions, Adani Green Energy will supply solar power at a fixed cost of Rs 2.70 per unit throughout the entire supply period, while that from coal will be indexed to coal prices.

India's largest renewable energy company, Adani Green Energy "will sign a long-term power purchase agreement (PPA) with MSEDCL under the Letter of Intent (LOI) for supply of 5 GW (5,000 MW) solar power from the world's largest renewable energy park being developed at Khavda in Kutch District of Gujarat, to Maharashtra state, as per the LOI awarded to Adani Power Limited as permitted under the tender conditions," the statement said.

Adani Power Limited (APL), India's largest private thermal power producer, "will sign a long-term Power Supply Agreement (PSA) with MSEDCL for the supply of 1,496 MW (net) thermal power to Maharashtra state from a new 1600 MW ultra-supercritical thermal power project", it added.

The statement, however, did not detail the tariff bid to win the tender.

MSEDCL, in March, floated a unique tender for sourcing 5,000 MW of electricity generated from sunlight and 1,600 MW of power generated from coal.

That tender was floated just ahead of the model code of conduct for the Lok Sabha elections kicking in, and it was awarded to Adani before the announcement of the assembly elections in the state.

The tender combined solar power with thermal electricity to meet peak energy demand and that during non-solar hours (like night hours or monsoon/winter months).

It gave equal energy weightage to electricity generated from renewable energy and that from coal. Bidders were asked to quote a unified tariff for the supply of 6,600 MW of electricity (5,000 MW from solar and 1,600 MW from thermal).

Adani Power quoted Rs 4.08 per unit to win the contract, according to sources said.

Its bid compares to Rs 4.36 per unit quoted by the second lowest bidder, JSW Energy, and Rs 4.70 per unit average procurement cost of Maharashtra last year.

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

In all, four companies participated in the tender for the electricity supply for 25 years.

The weighted average tariff for thermal and solar projects will help achieve a lower effective power tariff. Separate PPAs will be executed for solar and thermal projects. However, the aggregate power procurement will be complied in spirit even after that, sources said.

The bundled procurement is to meet future electricity requirements of the state, a source said, adding that against MSEDCL's contracted capacity of 27,877 MW, peak demand is projected at 35,573 MW in 2028-29 and 39,884 MW in 2031-32.

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

The combination ensures that thermal meets the base load and cheaper solar electricity is available to the grid, sources said, adding that bundling renewable and thermal power was to drive efficiencies of scale.

Sources said Adani will be paid a fixed price for renewable energy for 25 years, while there is an escalation price in the electricity produced from coal, but it more or less balances out after accounting for 1.5-2 per cent depreciation.

Against the regulatory requirement under Renewable Purchase Obligation (RPO), 32 per cent of Maharashtra's power demand is to be met from solar sources by 2028.

Currently, the figure stands at only 12 per cent, and so the procurement of 5,000 MW of solar power will help in filling that requirement.

Adani Power, India's largest private-sector thermal power generator, has a generation capacity in excess of 17 GW, which is rising to 31 GW by 2030.

Its sister company, Adani Green Energy Ltd, is the country's largest renewable energy company with a generation capacity of 11 GW, which is being expanded to 50 GW by 2030.

"The terms of the tender permit APL to bid for thermal power capacity along with solar power capacity, which can be supplied by a group company. APL accordingly also bid for 5000 MW solar capacity on behalf of AGEL, thereby, leveraging the two entities' respective competitive advantages and strengths in the thermal and solar power sectors," the statement said.

The solar capacity award of 5 GW is the world's largest such award since 2020, bolstering AGEL's leadership in India and as one of the largest RE portfolios globally. Similarly, the thermal capacity award is the largest in India in recent years to be awarded to the private sector.

The solar projects are expected to be connected to an inter-state transmission system and will be developed in a staggered manner over three years from the execution of the PPAs with MSEDCL.

The thermal capacity has been awarded to APL on a design, build, finance, own and operate (DBFOO) basis with the sourcing of fuel from coal linkages allocated under the SHAKTI Policy.

Under the terms of the Award, APL will enter into a 25-year Power Supply Agreement (PSA) with MSEDCL for the supply of 1496 MW of electricity (net of auxiliary consumption) on a long-term basis from a new thermal power plant having an installed capacity of 1,600 MW (2x800 MW) to be set up utilising Ultra-supercritical technology.

"Power supply under the proposed PSA will commence three and a half years after the appointed date as defined thereunder in case of Unit 1 (800 MW) and four years in case of Unit 2 (800 MW)," the statement said.

Sagar Adani, Executive Director, Adani Green Energy, said, "Our goal is to accelerate India's clean energy transition. This is a crucial step towards the country's energy independence and building a sustainable future".

"Adani Green is well positioned to achieve the 50 GW target with secured resource-rich sites in strategic locations, portfolio mix of renewables and storage solutions, robust supply chain and clear evacuation plans."

Anil Sardana, Managing Director, Adani Power, said, "As India advances in achieving its economic growth targets while maintaining a keen focus on sustainability, the role of conventional power in helping stabilise the grid and supplying base load power assumes greater importance".

"Adani Power is proud to partner with a leading industrialised state like Maharashtra by becoming one of its key suppliers of reliable and competitive power from its existing and upcoming capacities while enabling it to integrate an ever-increasing quantum of renewable energy in its grid.