APTEL Quashes MSEDCL’s 2 GW/4 GWh BESS Tender, Cites Post-Bid Change in Project Conditions
Appellate Tribunal for Electricity has quashed Maharashtra Electricity Regulatory Commission’s approval of MSEDCL’s 2,000 MW/4,000 MWh BESS tender, holding that a post-bid Ministry of Power condition linked to VGF eligibility materially altered the tender terms and compromised the integrity of the competitive bidding process.
June 06, 2026. By Mrinmoy Dey
In a judgment dated June 5, 2026, APTEL allowed a batch of appeals filed by several successful bidders, including Diwakar Renewable & Infra, OPG Power Generation, Onward Solar Power, Mahati Industries and Bhilwara Energy, challenging MERC’s order dated March 6, 2026 that had approved the tariff for procurement of storage capacity from a 2,000 MW/4,000 MWh BESS project for a period of 15 years.
The Tribunal ruled that the introduction of a requirement allowing Maharashtra State Electricity Distribution Company (MSEDCL) to retain the contractual right to utilise the BESS for at least 6,300 cycles during the contract period amounted to a material deviation from the original tender conditions, which had been based on a one-cycle-per-day operation and amounted to a total of 5,475 cycles over 15 years.
MSEDCL floated the tender in July 2025 for procurement of storage capacity from a 2,000 MW/4,000 MWh BESS project with Viability Gap Funding (VGF) support from the Power System Development Fund (PSDF). Initially structured around a two-cycle configuration, the tender was subsequently amended through addenda to a one-cycle-per-day framework before bids were submitted.
The bidding process attracted strong interest, with 46 entities submitting bids for an aggregate capacity of 11,110 MW/22,220 MWh, significantly exceeding the tendered requirement. Following reverse e-auction, the lowest tariff discovered was INR 165,998/MW/month, and the entire 2,000 MW capacity was allocated. MERC subsequently approved the procurement and tariff.
The controversy emerged after MSEDCL sought approval from the Ministry of Power (MoP) to deviate from the VGF scheme’s guideline of 1.5 cycles per day and operate the project at one cycle per day. In a letter dated December 31, 2025, the Ministry approved the request but imposed a condition that MSEDCL must retain the contractual right to use the BESS for at least 6,300 cycles during the contract period without any additional cost.
The bidders argued that their financial offers had been prepared based on the tender’s one-cycle-per-day design, equivalent to about 5,475 cycles over the 15-year contract term. They contended that the later introduction of the 6,300-cycle condition fundamentally altered project economics, battery degradation assumptions and VGF eligibility considerations after bid submission.
MSEDCL maintained that the Ministry’s letter merely conferred a contractual right and did not create a mandatory operational obligation for developers. The utility also argued that the condition related only to VGF eligibility and did not alter the Request for Selection (RfS) terms.
APTEL disagreed with both MERC and MSEDCL, holding that the Ministry’s approval was conditional and effectively required incorporation of the 6,300-cycle right into the Battery Energy Storage Purchase Agreement (BESPA). The Tribunal observed that once such a contractual right was embedded in the agreement, MSEDCL could choose to exercise it at any point during the project tenure, creating uncertainty and additional obligations for developers that had not been contemplated in the original bidding documents.
The Tribunal noted that bidders had submitted their offers with the understanding that they would not be required to operate beyond one cycle per day and that the Ministry’s subsequent letter introduced a new requirement after completion of the bidding process.
According to APTEL, such a change violated established principles of competitive bidding by effectively “changing the rules of the game” after bids had been submitted and tariffs discovered.
The Tribunal further rejected MSEDCL’s reliance on later clarifications issued by the Ministry of Power in February and March 2026, stating that these communications did not eliminate the risk that MSEDCL could eventually exercise its contractual right to demand higher cycle utilisation.
It also dismissed MSEDCL’s undertaking to compensate developers if VGF support were denied, observing that the assurance lacked regulatory approval and could not be treated as legally enforceable.
Concluding that the Ministry’s December 31, 2025 communication introduced a substantial and essential change after completion of the bidding process, APTEL held that the procurement exercise had been vitiated.
The Tribunal therefore set aside MERC’s tariff adoption order, quashed the bidding process, cancelled the Letters of Intent issued pursuant to the tender and directed MSEDCL to return security deposits and bank guarantees submitted by the appellants within four weeks.
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