By March 2026, Maha to supply 100% green energy for irrigation: MSEDCL

This shift is expected to reduce the ₹13,500-crore cross-subsidy being shouldered by industrial consumers, and make industrial tariffs in Maharashtra competitive with those of Gujarat, Karnataka and Tamil Nadu

MUMBAI: The Maharashtra State Electricity Distribution Company Ltd (MSEDCL) says it is making a shift to purchasing solar power for agricultural pumps, which would ultimately benefit industrial consumers, who are cross-subsiding irrigation for farmers. This shift is expected to reduce the ₹13,500-crore cross-subsidy being shouldered by industrial consumers, and make industrial tariffs in Maharashtra competitive with those of Gujarat, Karnataka and Tamil Nadu.

Navi Mumbai, India - August 11, 2018: CIDCO MD Lokesh Chandra press conference at CBD in Navi Mumbai, India, on Saturday, August 11, 2018. (Photo by Bachchan Kumar/ Hindustan Times) (Hindustan Times)

Spelling out MSEDCL’s plans for the power sector in Maharashtra, Lokesh Chandra, Managing Director of India’s largest power distribution company, told HT that by March 2026, the entire demand for electricity to power agricultural pumps in the state would be met by solar power generation. To achieve this, contracts have been awarded to various companies under the Mukhyamantri Saur Krishi Vahini Yojana (MSKVY 2.0), with a capacity of 16,000 MW. This would make Maharashtra the first state to supply 100% green energy for irrigation. MSEDCL has submitted its tariff proposal to the Maharashtra State Electricity Regulatory Commission, said Chandra.

Chandra said that due to truing-up – pending recovery for extra expenditure on power purchase and distribution for the last couple of years – the electricity tariff of certain categories of consumers, including residential, may increase from April 2025. However, he claimed, due to upcoming projects relating to cheap solar power, tariffs will fall across five years, in a phased manner.

For decades, pending dues from agricultural consumers towards electricity bills have been impacting the balance sheet of MSEDCL. Maharashtra has 4.74 million agricultural pump consumers, whose arrears amount to ₹65,565 crore. Further, to provide electricity to agricultural consumers at concessional rates, the state government offered a subsidy of ₹6,900 crore, and industrial consumers were paying a cross-subsidy, an additional sum in the form of higher tariffs. Due to this, the average tariff for industrial consumers went up to as much as ₹9.45 per unit.

“MSEDCL has the highest agricultural load in India, which accounts for 30% of its total demand or 40,000 million units. Providing them power at concessional rates entails a burden of ₹13,500 crore on industrial consumers across state. Besides, including the earlier subsidy and a new scheme of free power to farmers, the government pays around ₹15,000 crore. But under MSKVY 2.0, we have already expedited the process for 16,000 MW solar power projects. We will get this power in the range of ₹2.69 per unit to ₹3.10 per unit, which is much cheaper. As result, by March 2026, Maharashtra will be the first state to give 100% green energy for agriculture pumps. This will immediately give relief of ₹13,500 crore in electricity bills to industrial consumers. “So in the next five years, industrial tariffs will decrease from ₹9.45 per unit to ₹9.14 per unit.” said Chandra.

He added that in the absence of this, the power tariff for industry would have risen to ₹14.67 per unit in the next five years. He further said that since this will be decentralised solar generation, MSEDCL will save on the cost of transmission and distribution too.

While explaining plans for the power sector in Maharashtra, Chandra said that in the next five years, MSEDCL has planned to purchase 45,000 MW, the highest capacity addition since the formation of the state in 1960. “To support Maharashtra’s trillion-dollar economy dream, we have prepared a plan to purchase 45,000 MW of power. Besides, MSEDCL will invest around ₹65,000 crore to expand and strengthen its distribution network. There will also be an investment in the transmission network and a total of ₹3.5 lakh core will be invested in Maharashtra’s power sector. This will create around 7 lakh (700,000) jobs,” said Chandra.