MERC Sets Rooftop Solar Surplus Tariff at INR 2.82/kWh, Retains Competitive Bidding for New RE Projects

The Maharashtra Electricity Regulatory Commission (MERC) has fixed a tariff of INR 2.82/kWh for surplus rooftop solar power exported to the grid in FY 2026-27, while continuing competitive bidding as the mechanism for determining tariffs for most new renewable energy projects in the state.

In its order MERC said that no generic tariff would be specified for new utility-scale solar, wind, biomass, hybrid and co-generation projects. Instead, developers will be required to participate in competitive bidding processes conducted under central government guidelines, after which the Commission will adopt the discovered tariffs. MERC said that the approach reflects the maturity of the renewable energy market, where competitive auctions have consistently produced lower tariffs than regulator-determined rates.

The Commission has fixed the purchase rate for unplanned surplus electricity injected into the grid by rooftop solar consumers under net-metering and net-billing arrangements at INR 2.82/kWh. The tariff will apply from April 1, 2026, across all distribution licensees in Maharashtra, including MSEDCL, BEST, Tata Power, Adani Electricity and other utilities.

According to MERC, the INR 2.82/kWh rate has been derived from the lowest tariff already adopted by the Commission under the Mukhyamantri Saur Krishi Vahini Yojana 2.0. The Commission rejected demands from stakeholders and consumer groups seeking compensation at either the retail electricity tariff or the average power purchase cost (APPC) for surplus rooftop solar energy exported to the grid.

MERC observed that rooftop solar systems are primarily intended for self-consumption and reduction in electricity bills. It said that allowing a higher purchase rate for exported surplus electricity would effectively turn rooftop solar into a revenue-generating activity and increase the power purchase burden on distribution companies. The Commission added that any increase in the cost of purchasing surplus rooftop solar power would ultimately be passed on to non-solar consumers through higher tariffs.

MSEDCL had requested the Commission to reduce the rooftop solar surplus purchase rate to INR 2.24/kWh along with the benefit of renewable energy certificates, citing a more recent tariff discovered in another procurement process. However, MERC rejected the proposal, noting that the lower tariff had not yet been formally adopted by the Commission and therefore could not be used as a benchmark. As a result, the INR 2.82/kWh tariff has been retained for FY 2026-27.

For rooftop solar projects installed under gross metering arrangements, where the entire power generated is exported to the grid, MERC has also published the APPC applicable to each distribution licensee. The APPC for MSEDCL has been fixed at INR 5.40/kWh, while BEST will have an APPC of INR 6.65/kWh. The APPC for Tata Power Distribution has been set at INR 6.01/kWh and for Adani Electricity Mumbai Distribution at INR 5.11/kWh. In the case of Adani Electricity SEEPZ, the APPC has been fixed at INR 2.85/kWh.

The Commission clarified that these APPC values exclude the cost of renewable energy and liquid fuel purchases. However, in the case of Adani Electricity SEEPZ, the full power purchase basket has been considered because the utility sources nearly all of its electricity from renewable energy.

While new biomass and co-generation projects will also move to competitive bidding, MERC has continued to determine variable charges for existing projects operating under older power purchase agreements signed under previous generic tariff orders. The Commission fixed the variable charge for biomass-based projects at IR 6.85/kWh for FY 2026-27, slightly lower than the draft figure of INR 6.87/kWh after correcting a typographical error in the fuel cost calculation.

For non-fossil fuel-based co-generation projects using bagasse, MERC has fixed the variable charge at INR 5.29/kWh. The Commission clarified that both these rates will apply only to legacy projects with existing PPAs executed under earlier generic tariff frameworks.

MSEDCL had also urged the Commission to reduce the annual fuel cost escalation factor for biomass and bagasse projects from 5 Percent to a lower level based on recent market trends, including around 4.41 percent for sugarcane prices. MERC rejected the request and retained the 5 percent annual escalation factor.

The Commission said that the 5 percent escalation is explicitly prescribed under the MERC Renewable Energy Tariff Regulations, 2019, and therefore cannot be altered through the annual tariff order. It added that changing the escalation formula outside the regulations could create uncertainty for developers and generators operating under long-term PPAs.

All approved tariffs, variable charges and APPC rates will come into effect from April 1, 2026. With the latest order, Maharashtra has reinforced its shift toward market-based renewable energy pricing while continuing to provide defined compensation mechanisms for rooftop solar consumers and legacy biomass and bagasse-based projects.