Omnicore Weekly #262 - 5 June 2026

Dear Patrons & Readers,

The Appellate Tribunal for Electricity (APTEL) has set aside the Maharashtra Electricity Regulatory Commission’s (MERC) order approving the tariff for Maharashtra State Electricity Distribution Company Limited’s (MSEDCL) 2,000 MW/4,000 MWh Battery Energy Storage System (BESS) tender. The Tribunal ruled that a crucial condition introduced after bid submission fundamentally altered the tender framework and violated principles of fair and transparent bidding.

The dispute arose from MSEDCL’s procurement of 2,000 MW/4,000 MWh BESS capacity under a competitive bidding process supported by Viability Gap Funding (VGF) from the Power System Development Fund (PSDF). The tender was initially designed around a one-cycle-per-day operational model after MSEDCL modified the original configuration through addendums issued during the bidding process. Developers submitted bids and financial proposals based on this revised framework, which implied approximately 5,475 operational cycles over the 15-year contract period.

The Ministry of Power’s VGF scheme, issued in June 2025, provided support of up to ₹18 lakh per MWh for eligible BESS projects. While the scheme generally contemplated an average of 1.5 cycles per day, it also allowed procuring entities such as MSEDCL to modify the operational configuration according to their requirements. Acting under this flexibility, MSEDCL altered the tender design to one cycle per day and invited bids accordingly.

After financial bids had been submitted and the bidding process was effectively completed, MSEDCL sought approval from the Ministry of Power for the deviation from 1.5 cycles to one cycle per day. On 31 December 2025, the Ministry approved the deviation but imposed a significant condition: MSEDCL must retain the contractual right to utilize the BESS assets for at least 6,300 cycles during the contract period without any additional cost.

Several successful bidders, including OPG Power Generation, Bhilwara Energy, Mahati Industries, Onward Solar Power, and Diwakar Renewable & Infra, challenged this development. They argued that the new condition substantially changed the commercial assumptions underpinning their bids. Their financial calculations, battery degradation estimates, augmentation strategies, and project economics had all been based on a one-cycle-per-day framework. Requiring assets to potentially support 6,300 cycles instead of 5,475 cycles would increase costs and risks while leaving the tariff unchanged.

MERC had earlier dismissed these concerns, holding that the Ministry’s letter merely granted MSEDCL a contractual right rather than imposing a mandatory obligation on developers. Consequently, MERC approved the discovered tariff of ₹1,65,998 per MW per month for a period of 15 years and directed MSEDCL to execute Battery Energy Storage Purchase Agreements (BESPAs) with successful bidders.

APTEL, however, disagreed with MERC’s interpretation. The Tribunal observed that bidders had prepared their offers based on the tender conditions and draft BESPA available at the time of bidding. The post-bid Ministry communication effectively introduced a new operational requirement that could materially affect project viability. Although the Ministry later clarified that the 6,300-cycle provision merely granted MSEDCL a right and did not mandate its use, APTEL held that the existence of such a contractual right itself created uncertainty and risk for developers.

The Tribunal emphasized that MSEDCL could choose to exercise this contractual right at any point during the 15-year project tenure. If developers were unable to achieve the higher cycle threshold when called upon, they could face adverse consequences, including possible loss of VGF support or obligations to refund benefits already received. Therefore, the risk created by the new condition was real and not merely hypothetical.

APTEL also rejected MSEDCL’s argument that subsequent clarifications from the Ministry and assurances regarding VGF payments adequately addressed developers’ concerns. The Tribunal noted that these assurances lacked binding regulatory backing and could not eliminate the uncertainty introduced by the post-bid condition.

A key principle highlighted in the judgment was that tender conditions cannot be altered after the bidding process has concluded. APTEL stated that introducing a substantial new requirement after bids are submitted effectively amounts to “changing the rules of the game after the game has commenced,” which is legally impermissible. The Tribunal found that the Ministry’s condition represented a significant deviation from the original Request for Selection (RfS) and draft BESPA documents upon which bidders had relied.

Consequently, APTEL concluded that the bidding process had been vitiated by the post-bid introduction of the 6,300-cycle condition. The Tribunal set aside MERC’s tariff adoption order, quashed the entire bidding process, cancelled any Letters of Intent issued pursuant to the tender, and directed MSEDCL to return security deposits and bank guarantees submitted by bidders within four weeks.

The ruling is significant for India’s rapidly growing energy storage sector. It reinforces the importance of bid certainty, regulatory transparency, and contractual stability in large-scale infrastructure procurements. As India accelerates deployment of battery storage to support renewable energy integration and grid modernization, the judgment serves as a reminder that material changes to tender conditions after bid submission can undermine investor confidence and jeopardize procurement outcomes.

Highlights from the week of
29 May 2026 to 5 June 2026