APTEL quashes MSEDCL’s 2,000 MW BESS bidding process
The Appellate Tribunal for Electricity (APTEL) has set aside the Maharashtra Electricity Regulatory Commission’s (MERC) order dated March 6, 2026, which had adopted a tariff of Rs 1,65,998 per MW per month for a 2,000 MW / 4,000 MWh Battery Energy Storage System (BESS) project. The Tribunal also quashed the entire competitive bidding process initiated by Maharashtra State Electricity Distribution Company Limited (MSEDCL).
The judgment was delivered by a two-member bench comprising Hon’ble Ms. Seema Gupta, Officiating Chairperson, and Hon’ble Mr. Virender Bhat, Judicial Member. The bench allowed five connected appeals filed by Diwakar Renewable & Infra Pvt. Ltd., OPG Power Generation Pvt. Ltd., Onward Solar Power Pvt. Ltd., Mahati Industries Pvt. Ltd., and Bhilwara Energy Ltd.
Cycle life dispute
The dispute arose from a letter dated December 31, 2025, issued by the Ministry of Power (MoP) to MSEDCL. The letter granted approval to deviate from 1.5 cycles per day to a single-cycle-per-day operation, subject to the condition that MSEDCL retain the contractual right to use the BESS for at least 6,300 cycles during the 15-year contract period without any additional cost.
According to the appellants, this condition was introduced after the submission of technical and financial bids, for which the last date was November 3, 2025. They argued that the condition materially altered the bidding framework.
Under the original Request for Selection (RfS) and draft Battery Energy Storage Purchase Agreement (BESPA), bidders had structured their financial bids around a single cycle per day, equivalent to around 5,475 cycles over 15 years. The appellants contended that the revised condition rendered the quoted tariffs commercially unviable and created uncertainty over eligibility for Viability Gap Funding (VGF) of up to Rs 18 lakhs per MWh under the MoP’s VGF scheme.
APTEL observations
Writing for the bench, Judicial Member Mr. Virender Bhat observed that the MoP’s communication introduced a new condition after completion of the bidding process.
“Manifestly, this letter introduces a new condition and requirement for the successful bidders to use BESS for at least 6300 cycles during the contract period which is contrary to the terms and conditions contained in the RfS document as well as draft BESPA… It is a trite law that goal post cannot be rearranged or asked to be rearranged after the bidding process is complete to the prejudice of the rights of the bidders.”
The Tribunal rejected MSEDCL’s submission that the 6,300-cycle provision was only a contractual right and not a mandatory operational obligation. It held that once incorporated into the BESPA, the provision could be invoked by MSEDCL at any stage during the contract tenure, thereby exposing bidders to additional operational and financial risks.
The bench also noted that bidders faced the possibility of losing VGF support if they were unable to comply with the revised condition.
Undertaking rejected
The Tribunal dismissed an undertaking submitted by MSEDCL’s counsel stating that the utility would itself bear the VGF amount if the MoP denied funding solely because of the 6,300-cycle condition.
The undertaking was based on an email issued by MSEDCL’s Chief Engineer (Renewable Energy). However, the Tribunal held that the undertaking lacked legal enforceability as it did not have board approval or regulatory consent for such expenditure.
“Neither can any sanctity be attached to such undertaking nor is the same enforceable,” the judgment stated.
MoP clarifications
The Tribunal also examined subsequent clarifications issued by the MoP to Uttar Pradesh Power Corporation Limited (UPPCL) and MSEDCL, which stated that the 6,300-cycle clause provided only a contractual right and not a mandatory requirement.
However, the bench held that these clarifications did not address the concerns raised by the appellants because they did not provide any assurance that the provision would never be enforced or that bidders would not face adverse consequences for failing to achieve 6,300 cycles.
Final directions
APTEL set aside MERC’s order and quashed the entire bidding process conducted by MSEDCL.
The Tribunal directed MSEDCL to return all security deposits submitted by the appellants within four weeks from receipt of the judgment. It also directed the utility to return all bank guarantees within the same period.
Any letters of intent issued pursuant to the bid acceptance were also quashed.
Sector implications
The ruling reinforces the requirement for procedural certainty in competitive bidding processes conducted under Section 63 of the Electricity Act, 2003.
The judgment also reiterates that material conditions affecting project viability or VGF eligibility cannot be introduced after bid submission, irrespective of whether such conditions are framed as contractual rights retained by the procurer.
The ruling may have implications for similar BESS tenders in other states that are linked to central VGF schemes and involve post-bid clarifications relating to cycle life and utilisation requirements.
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